Quarterly National Accounts of the CR

Commentary

Contents

According to preliminary estimate, GDP increased in Q3 by 4.9% at constant prices year-on-year. Adjusted for seasonality and the number of working days, the GDP was 1.0% up quarter-on-quarter. In total for Q1-Q3 2005, GDP grew by 5.0% year-on-year. An update of a time series covering all quarters of 2004 and 2005 was made together with the current estimate. This time series is now fully linked to the system of national accounts published in the end of September this year. New acquired information from statistical and other sources was taken into consideration. Previous and current estimates of GDP growth are given in the following table:




The slowdown of the year-on-year growth of GDP in Q3 2005 was particularly due to development in agriculture where the year-on-year fall in gross value added (GVA) by 10.2% affected GDP growth at constant prices by approximately 0.5 percentage points.

Year-on-year development in Q3 at constant prices (unless otherwise stated):

On the demand side of the economy, GDP growth was contributed to by all expenditure components (except for inventories), in particular by the development of external trade balance and final consumption expenditure. Inventories grew too, but substantially less than in Q3 2004 when the increase was extraordinary high.

Household final consumption expenditure rose by 2.9% year-on-year (+4.4% to CZK 369.4 billion at current prices) in relatively low-inflationary conditions (implicit deflator of household expenditure was 101.5%) and under the moderate nominal growth of disposable income (+3.8%). The highest year-on-year increases were recorded for equipment of households (+10.0%) and for expenditures related to transport (+9.6%); on the other hand, the highest decreases were observed for expenditure on post and telecommunications (-6.8%) and hotels and restaurants (-3.0%). In terms of structure, expenditure on non-durables (44.2%) and services (38.9%) was prevailing; the share of expenditure on durables (16.9%) was traditionally the lowest one (at current prices).

The growth of final consumption expenditure of institutions coming under the government sector (+6.1%) was affected, similarly like in the previous quarter, by the one-off inclusion of the second group of fighters Jas-39 Gripen (they were also recorded as imports of goods). As to the impact on GDP, this transaction was neutral; if it had not been recorded, government expenditure would have increased by 2.1%.

The growth of gross fixed capital formation by 3.2% was related to the gradually gaining dynamics of construction output and equipment of large complete plants with machinery etc. Investment in other buildings grew by 2.4%, in machinery and equipment by 2.1% and in transport equipment by 15.9%. In dwellings was invested by 5.2% less. Broken down by sector, in fixed capital formation invested most non-financial corporations (63.1% of total CZK 196.5 billion at current prices), followed by the general government sector (17.9%) and households (16.7%). By type of goods, 38.3% of the total (current prices) was invested in non-residential buildings and structures, 31.0% in machinery and equipment, 13.5% in transport equipment and 11.0% in dwellings.

Inventories increased by only CZK 3.7 billion, i.e. substantially less than in Q3 2004.

Like in Q2 2005, the GDP growth was most contributed to by external trade. Exports were 10.9% up year-on-year (of which goods +12.5% and services +0.8%) and imports 6.1% up (of which goods +7.3% and services -2.7%). Terms of trade deteriorated by 2.6 percentage points year-on-year.

On the supply side of the economy, GVA grew by 5.2%, i.e. by 0.3 percentage points more than GDP. Shares in the growth of GVA had particularly manufacturing (+8.7%), trade (+8.8%) and real estate, renting and business activities (+7.3%).

At current prices, GDP rose by 5.0% to CZK 742.8 billion, the overall price level measured by the GDP implicit deflator remained virtually constant (+0.1%). The partial increase in domestic producer and consumer prices was nearly offset by a higher decrease in export prices (-3.2%) than import prices ( -0.6%).

In Q3 2005, total EU25 GDP volume was up by 1.7%, of which GDP in Germany increased by 1.4%, in Austria by 1.6%, in Poland by 3.7% and in Slovakia by 6.2% in year-on-year terms.

The nominal disposable income of the households sector amounted to CZK 387.5 billion at current prices, growing 3.8 % y-o-y. Of their current income, households spent 64.5 % on individual consumption and their current expenditures and saving accounted for 31.7 % and 3.8 % respectively. The principle income item (wages paid) grew 5.7 %. In terms of current prices, households spent CZK 15.5 billion more than in Q3 2004, y-o-y growth being 4.4 %. Gross saving dropped by CZK 1.0 billion y-o-y down to CZK 22.0 billion. The rate of saving – ratio of gross saving to gross disposable income – dropped from 6.16 % in Q3 2004 to 5.67 %.