Thursday, August 14, 2008

Czech Economy Continues To Slow In Q2 2008

The Czech economy expanded at what was effectively the slowest pace in four years in the second quarter of 2008, although it was perhaps just a touch faster than I personally had been expecting. Gross domestic product grew 4.5 percent, compared with a revised 5.1 percent in the previous quarter, slackening for a fourth straight quarter, according to data from the Prague-based statistics office.

Ostensibly the economy continued to maintain the same 0.9% quarter on quarter expansion pace as in the first quarter, but that may be slightly deceptive, since the early calendar position of Easter this year has meant that in most European economies activities from March have been passed through to April without the statistics offices seasonal adjustments being adequately able to capture the effect. So my feeling is that with a better seasonal correction we would find that the economy expanded rather faster in Q1 and rather slower in Q2, but in any even hardly by an earth shattering value.

The only clue we really have while we wait for the detailed breakdown from the statistics office on 10 September is that the trade surplus may well have played a significant part. Exports of goods in current prices rose 4.6 percent in the three-month period ending June 30, down from 5.7 percent in the first quarter, but slowing domestic demand has meant that imports slowed even more rising by only 2.7% year on year in the second quarter. The three-month goods trade surplus shrank to 31.4 billion koruna, compared with 33.025 billion koruna in the first quarter, according to the statistics bureau's Aug. 4 report so really at the end of the day we are all just guessing here.

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