Quarterly National Accounts of the Czech Republic

As in Q2 2004, the year-on-year growth of capital expenditure continued to outstrip that of final consumption noticeably in Q3, too. While final consumption expenditure stagnated in Q3 2004 in real terms (-0.3%), gross fixed capital formation expenditure maintained its growth rate (+9.7%), after its considerable growth in the previous two quarters.

Year-on-year development of GDP expenditure components in Q3:

• The development of final consumption expenditure at constant prices differed in households and non-profit institutions from that in general government. The expenditure of households increased by 2.0% in real terms. The year-on-year growth rate of expenditure of households has been incessantly dropping since Q3 2003. In terms of current prices, households spent CZK 17.5 billion more than in the 3rd quarter of 2003, y-o-y growth being 5.3 %. The largest year-on-year increases were recorded for purchases of food and tobacco products and for expenditure on holiday packages and recreational services. The current price expenditure growth was affected by increases in VAT on services and in consumer tax on cigarettes (harmonization with the EU); food prices also increased. Expenditure on recreation also grew at constant prices due to the rising demand fuelled, among other things, by the exchange rate appreciating in this quarter. Nominally, final consumption expenditure of households grew faster than their disposable income by 1.0 percentage point. General government expenditure decreased by 5.5% in real terms, first of all due to savings in expenditure on material, repair and maintenance.
• Expenditure on gross capital formation significantly increased again. At current prices, gross fixed capital formation increased by CZK 19.6 billion, especially due to the continued investment in transport infrastructure, production and non-production capacities of foreign investors and housing construction. Changes in inventories were only 78.0% of inventories in the corresponding quarter of 2003.
• External balance of goods and services in total was influenced by the dynamic development of its two components – exports and imports at current prices were by CZK 100.3 billion (+25.6%) and CZK 85.8 billion (+21.1%) higher than in Q3 2003. Exports were growing faster at both constant and current prices, terms of trade being improved (deflators of exports grew by 2.4% and of imports by 1.5% year-on-year). Trade balance stood at -CZK 5.0 billion at current prices or at -CZK 7.2 billion at the previous year’s prices.
• As far as industries are concerned, agriculture with its year-on-year growth of gross value added by 12.4% at constant prices (resulting from the low values in Q3 2003 and this year’s favourable harvest) did best. However, the largest contributions to the annual growth of value added in total (+2.8%, year-on-year, constant prices) were made by increases in value added in industry (+5.9%), financial intermediation and business services (+3.8%) and trade plus transport (+3.3%). Construction and selected, mostly non-market services rendered mainly by the general government sector remained under their last year’s level.

The nominal disposable income of the households sector amounted at current prices to CZK 366.8 billion, growing 4.3 % y-o-y. Of their current income, households spent 65.2 % on individual consumption and their current expenditures and saving accounted for 30.7 % and 4.1 % respectively. The principle income item (wages paid) grew 5.3 %. Gross saving dropped by CZK 2.2 billion y-o-y down to CZK 22.1 billion. The rate of saving – ratio of gross saving to gross disposable income – dropped from 6.91 % in the 3rd quarter of 2003 to 6.03 %.