Quarterly National Accounts of the Czech Republic

4th quarter of 2003

According to preliminary estimates constant price GDP increased by 3.1% year-on-year in the last quarter of 2003. After adjustments for seasonal fluctuation, it grew by 3.2% y-o-y and 0.7% q-o-q.

Along with the preliminary estimate for Q4, the CZSO updated its estimates for Q1, Q2 and Q3. As a result, the GDP growth figures were updated to 2.5% (+0.1 percentage points) for Q1 and to 2.6% (+0.2 percentage points) for Q2; the GDP growth estimate released for Q3 remained unchanged.

Constant price expenditure on final consumption and capital formation went on rising in Q4 (+3.7% and +6.2%, respectively), and negative net exports further increased by 12.3% due to the deteriorating trade balance. The moderate year-on-year slowdown of GDP growth at constant prices in Q4 did not fully correspond to the GDP development at current prices that got faster (to 7.1%). This different development was caused by a 3.8% year-on-year rise in the total price level of GDP (expressed by implicit deflator), where the turning point was especially observed in consumer prices that increased by 1% year-on-year on average in Q4, having stagnated in Q1-Q3. The growth of the total price level was also fuelled by a positive change in terms of external trade, with both export and import prices growing.

GDP expenditure components (year-on-year, constant prices of 1995):

- Final consumption expenditure by households increased by 4.6% - i.e. less than in the previous quarters. The development was affected by relatively lower pre-Christmas retail sales, probably due to the fact that households partly put off their purchases till the period of January clearance sales. A high growth was seen in post and telecommunications (+13.7) and transport (+9.0%). On the other hand demand for clothing and footwear stagnated, and the increase in expenditure on food and non-alcoholic beverages (+1.6%) was also comparatively low (compared to the previous quarters).
- Expenditure by general government increased by 1.6%.
- Gross fixed capital formation was 4.8% up, investment in building and structures (+7.5%) growing more than in machinery and equipment (+3.6%).
- The different development of trade balance at constant and current prices was brought about by the faster growth of export prices than of import prices (by 1.9 percentage points). The positive year-on-year change in commodity trade balance at current prices by CZK 0.6 billion thus became a drop of CZK 9.8 billion when deflated. The balance of services (both at constant and current prices) improved by CZK1.6 billion.

The nominal disposable income of the households sector amounted at current prices to CZK 339.4 billion, growing 4.2 % y-o-y. Disposable income at constant prices grew 3.3 %. Of their current income, households spent 63.6 % on individual consumption and their current expenditures and saving accounted for 33.2 % and 3.2 % respectively. The principle income item (wages paid) grew 5.6 %. In terms of current prices, households spent CZK 17.1 billion more than in the 4th quarter of 2002, y-o-y growth being 5.6 % (4.6 % at constant prices). Gross saving dropped by CZK 3.5 billion y-o-y down to CZK 16.5 billion. The rate of saving – ratio of gross saving to gross disposable income – dropped from 6.12 % in the 4th quarter of 2002 to 4.85 %.

Year 2003

Gross domestic product at constant purchase prices increased by 2.9% year-on-year (preliminary estimate). At current prices GDP increased by CZK 134.5 billion (+5.9%) to CZK 2,410.1 billion, and the total price level expressed by implicit deflator increased by 2.9%.

On the supply side of the economy, constant basic price gross value added (GVA) net of the influence of subsidies and indirect taxes increased by 2.6%. Its growth was positively affected by the year-on-year development in transport, storage and communications (+5.6%), wholesale and retail trade and repair of motor vehicles (+2.9%) and manufacturing (+2.9%). A drop was recorded for agriculture (-4.1%).

The formation of current basic price GVA in 2003, amounting to CZK 2,170.8 billion, was mainly contributed to by market and non-market services (accounting for 29.7% of total GVA), manufacturing (27.2%), wholesale and retail trade and repair of motor vehicles (14.6%), transport, storage and communications (9.5%), and construction (7.0%).

Demand for GDP (at constant prices of 1995) developed in a differentiated manner, final consumption expenditure and capital consumption expenditure increased by 4.1% each and negative net exports increased even more.

Development of the expenditure components (year-on-year, constant prices of 1995, unless stated otherwise):

- Final consumption expenditure by households rose by 5.5%, which was roughly covered by an increase of their disposable income; moreover, interests in loan purchases increased a great deal. Compared to the previous year the population spent considerably more on post and telecommunication services (+13.1%, this sector experienced a boom of mobile technologies) and on transport, storage and communications (+11.0%). No drop occurred in any of the basic expenditure groups. In terms of current prices households spent by CZK 66.5 billion more than in 2002, but total price level increased only a little (+0.1%). Rather high price growth was recorded for expenditure on rent (+4.0%), but on the other hand decreases in prices were measured for clothing and footwear (-4.8%), food and non-alcoholic beverages (-2.3%), and furnishings, household equipment and routine maintenance of the house (-1.5%).
- Expenditure of institutions included in the general government sector remained at the previous year’s level.
- Gross fixed capital consumption increased by 3.7% of which investments in buildings and structures accounted for 5.8%, investments in machinery and equipment for 2.6% and other investments for 1.0%. Total price deflator increased by 1.0% year-on-year (+2.2% for buildings and structures, but - 0.8% for machinery and equipment).
- The CZK 51.3 billion rise in inventories at current prices (+CZK 40.6 billion in 2002) resulted from rises in all of their three kinds: materials and supplies rose by CZK 10.7 billion, work in progress and finished products by CZK 21.5 billion and goods for resale by CZK 19.1 billion.
- External balance of goods and services at current prices ended in 2003 in a larger deficit than in 2002: trade balance improved by CZK 5.1 billion, but balance of services was worse by CZK 8.6 billion than in 2002. After deflation, the negative balance expanded due to different price development of exports and imports. The physical volumes of exports and imports were higher by 6.7% and 7.6% year-on-year, respectively (import prices fell by 0.3% and export ones increased by 0.6%, all year-on-year).

The nominal disposable income of the households sector amounted at current prices to CZK 1310.9 billion, growing 5.0 % y-o-y. Disposable income at constant prices grew 4.9 %. Of their current income, households spent 63.6 % on individual consumption and their current expenditures and saving accounted for 32.6 % and 3.8 % respectively. The principle income item (wages paid) grew 5.8 %. In terms of current prices, households spent CZK 66.5 billion more than in 2002, y-o-y growth being 5.6 % (5.5 % at constant prices). Gross saving dropped by CZK 2.1 billion y-o-y down to CZK 74.0 billion. The rate of saving – ratio of gross saving to gross disposable income – dropped from 6.10 % in 2002 to 5.64 %.