Quarterly National Accounts of the CR

According to preliminary estimates, GDP increased in Q2 by 5.1% at constant prices year-on-year (y-o-y). Having been aAdjusted for seasonal variations and the number of working days, the GDP growth was +1.3% up on Q1 2005. A higher y-o-y growth (+5.7%) was last achieved in Q2 1996. At the same time, the y-o-y growth of GDP that had been estimated for Q1 2005 was updated from +4.4% to +4.7%, when the new calculation used more accurate data on external trade statistics and further data later obtained laterdata. In the 1st half of 2005 year, thus GDP rose by 4.9% at constant prices.

On the demand side of the economy, characteristic of the 2nd quarter Q2 was the a high increase (by CZK 23.8 billion) of the external balance surplus at current prices (which was even higher at constant prices), the a weak increase of final consumption expenditure (by 1.8% at constant prices) and the a real decrease of total gross capital formation expenditure (fixed capital and change in inventories) by 4.1% being caused by the development in the area of inventories.

Household final consumption expenditure rose really y-o-y by 2.1% y-o-y at constant prices (by 1.6% in the 1st quarter Q1 2005). Consumers showed increased interest especially in garments, footwear, furniture, audio-visual equipment and, unlike in the first quarterQ1, also in transport equipment. On the other hand, they spent less than in Q2 2004 for catering and accommodation services than in Q2 2004.

Final consumption expenditure of institutions coming under the government sector changed turned from the y-o-y drop in Q1 2005 (-3.5%) to the an increase by of 0.9%. It This was significantly influenced by one-off inclusion of six Jas-39 Grippen fighters (as well as into imports of goods). This operation inclusion did not affect GDP, but if it had not happened been made, the final consumption expenditure of government institutions would have been lower than in Q2 2004.

The growth of gross fixed capital formation decelerated from +2.9% in Q1 2005 to +2.3% in Q2 2005. The An increase of machinery acquisition, especially of transport equipment, was characteristic for the development in both in Q1 and Q2 2005. On the other hand, investment in buildings and structures (except dwellings) dropped y-o-y. It This was significantly influenced by the high comparative base of 2004 connected with the change of VAT rate for in construction.

Inventories increased merely by CZK 5.4 billion in Q2 2005 (by +CZK +15.8 billion in Q2 2004) at 1995 constant prices especially because of their absolute decrease in trade.among trading organisations.

The GDP growth was most markedly affected by foreign external trade development, as well as like in Q1 2005. Exports of goods increased y-o-y by 7.6% y-o-y at constant prices while imports remained basically on the Q2 2004 level (a 0.1% decrease).

On the supply side of the economy, gross value added (GVA) showed the reached a 5.5% y-o-y increase y-o-y at constant prices,. It which was by 0.4 percentage points higher more than GDP increasegrowth. “Wholesale and retail trade services, repair services of motor vehicles, motorcycles and personal and household goods” made the biggest contribution to the GDP y-o-y growth in Q2 2005 (more than 40% of the total increase of gross value added (GVA) at current prices, more than 26% growth at constant prices). As to industries significant in terms of weight, “Electricity, gas and water supply” shows higher than average growth (y-o-y increase by 9.2%). The “Real estate, renting and business activities” industry kept the rate of GVA growth from the Q1 2005 (+4.3%). GVA in manufacturing increased more (+2.7% in the Q2 2005) than in the Q1 2005 (+0.7%). As far as individual sub-industries concerns, “Manufacture of motor vehicles, trailers and semi-trailers” shows the highest rate of GVA growth (y-o-y increase by 33.8% in Q2 2005) as well as its suppliers (e.g.manufacture of motors). GVA of construction remained basically on its last year’s level (rate of growth is +0.1%), while GVA of “Transport, storage and communication” recorded a y-o-y decrease of 1.8% in Q2 2005 (it was +2.9% in Q1 2005).

GDP at current prices increased y-o-y by 5.3% y-o-y in Q2 2005. Global price level measured by the GDP implicit deflator increased thus grew merely by 0.2%. Partial growths increases of domestic producer and consumer prices were basically compensated for by a decrease in terms of trade decrease when where export prices fell down more rapidly than import onesprices.

The nominal disposable income of the households sector amounted at current prices to CZK 372.2 billion, growing 2.3 % y-o-y. The lower growth was influenced by one-off contribution payment to pensioners and children in Q2 2004. Of their current income, households spent 62.0 % on individual consumption and their current expenditures and saving accounted for 33.2 % and 4.8 % respectively. The principle income item (wages paid) grew 5.8 %. In terms of current prices, households spent CZK 11.1 billion more than in Q2 2004, y-o-y growth being 3.3 %. Gross saving dropped by CZK 3.9 billion y-o-y down to CZK 27.1 billion. The rate of saving – ratio of gross saving to gross disposable income – dropped from 8.53 % in Q2 2004 to 7.29 %.