Friday, March 07, 2008

Czech GDP Q4 2007 Detailed Report

The Czech economy grew in the fourth quarter of 2007 at the fastest pace in almost two years on increased demand for health care and higher public spending on construction works according to the final report from the statistics office which is out today. Gross domestic product expanded year on year by 6.6 percent, which compares with the preliminary estimate of 6.9 percent reported on Feb. 15 and a revised 6.3 percent for the third quarter.

The economy grew by a record 6.5 percent in whole year 2007.

The government raised indirect taxes and imposed fees to discourage people from overusing public health care. That triggered higher spending on items such as drugs in late 2007, more than outweighing the effect of surging inflation on household expenses. This year's growth will slacken to between 4 percent and 5 percent, according to the official forecast.

The central bank predicts GDP will grow 4.1 percent in 2008 and the inflation rate is projected to pick up to 6.3 percent from 2.8 percent.

Consumer spending, which was the dominant driver growth for a consecutive second year, rose by 4 percent in constant price terms in Q4 when compared with Q4 2007, the slowest pace in two years. On the other hand, government expenditure was up 3.1 percent in the October- December period, the first increase in real spending in three quarters.

One-time factors ``predominantly applied to increased performance of the health industry, which resulted in higher expenditures of health insurance companies, and more intensive repair of road network with the impact on final government consumption expenditures,'' the office said. Without these effects they estimated growth would have been around 6 percent.

Gross fixed investment growth accelerated to an annual 8 percent in real terms and 9.8 percent in nominal ones, adding 2 percent to the overall GDP growth.

Exports of goods and services climbed at an annual rate of 12.5 percent when adjusted for price growth, more than a 10.2 percent increase in imports, as Czech manufacturers continued to benefit from rising demand in other EU nations, and in particular in Germany and Slovakia. External trade accounted for 2 percent of the GDP increase.

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