Gross domestic product - 1. quarter of 2007

Real GDP grew by 6.1% year-on-year in the first quarter of 2007; a nearly ten-percent increase of nominal GDP was more than before eliminated by price changes, in particular the terms of external trade. The overall price level measured by GDP deflator recorded the highest growth in last two years. Economic growth was driven by household final consumption expenditure.
According to preliminary estimates, real GDP increased by 6.1% in Q1 2007 compared to Q1 2006. Adjusted for seasonal and working day effects, GDP grew by 1.5% in comparison to Q4 2006. The figures for Q1 2007 indicate that the trend changes of key macroeconomic aggregates influencing demand for GDP, which started to appear in the second half of 2006, are more stable. Household final consumption expenditure became the main stimulus of economic growth, while the contribution of external trade to real GDP growth completely disappeared. Increasing demand on the supply side is constantly satisfied by growing output and gross value added especially in manufacturing, construction and trade.
 
Supply side of the economy
 
An increase of 6.3% in gross value added (constant prices) was mainly due to the growth of manufacturing (the most important industry in terms of volume) where real GVA rose by 9.4%. Within manufacturing, the best results were achieved in manufacture of machinery and equipment, manufacture of fabricated metal products and manufacture of car industry products. A highly above-the-average growth (+17.8%) was recorded in construction thanks to the mild winter. The mild winter had a negative effect on GVA produced in power generating and heat supply industry, which plummeted by over 40%. 
 
Nominal GDP grew by 9.9% year-on-year and reached CZK 816.1 billion in Q1 2007; the overall price level measured by GDP implicit deflator rose by 3.6%, which is the highest figure since Q4 2004. Higher growth of nominal GDP resulted from unequal increases in deflators of output (+1.8) and intermediate consumption (+0.9%), which reflected the different trends of export and import prices.
 
Demand side of the economy
 
In comparison to Q1 2006, household final consumption expenditure at constant prices rose by 6.7%, which was the biggest growth over last 13 quarters. Among important (in terms of volume) groups of consumer products, the highest increases were observed for expenditures on household equipment and routine maintenance of the house, purchase and operation of motor vehicles, clothing and footwear, and audio-visual equipment. Household final consumption expenditure at current prices grew by 7.7% and reached CZK 376.8 billion, which fully corresponded to a 7.8% increase in household disposable income.
 
The year-on-year growth of gross fixed capital formation slowed down considerably to 1.5% (from 8.1% in Q4 2006), mainly due to a fall of investments in machinery and equipment (-6.6%) related to the fact that no large investment projects expanding or restoring production capacity were implemented.
 
External trade in goods and services at current prices (external trade surplus rose by CZK 9.8 billion year-on-year), after deflation to previous year’s prices, was highly affected by changing terms of trade, where the tendency of improvement was not just borne out but even deepened. Export prices did not change year-on-year on average, but import prices dropped by 2.3%. As a result, external trade figures at current prices were completely different to those at constant prices. Whereas, at current prices, total exports grew by 0.8 p.p. faster than total imports, the trend at constant prices was quite opposite – total imports rose by 1.9 p.p. faster than exports. The reason for that can be found in a combination of more or less standard impacts (key commodity prices in world markets, exchange rates between CZK, EUR and USD) and in the long-term trend of improving export prices of domestic exporters.
 
EU 27 and Euro area GDP grew by 3.2% and 3.0% respectively in Q1 2007, according to estimate released by Eurostat on 1 June 2007. GDP in Slovakia increased by 9.0%, in Poland by 6.8%, in Germany by 3.6%, in Austria by 3.2% and in Hungary by 3.1%.                   
In accordance with the announced revision policy the Czech Statistical Office carried out the regular routine revision of national accounts 2004 and 2005. This annual revision took into account methodological and subject matter adjustments connected with the observation of income and expenditure on services relating to the rest of the world, which were agreed on by the Czech National Bank and the Czech Statistical Office. Selected revised indicators covering the years 2004 to 2006 (estimate for 2006 was the sum of the quarterly figures) were released on 7 June 2007, related quarterly indicators are now available on the CZSO website. The table below shows the size of quarterly GDP corrections.

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Contact:  Ing. Jan Heller, tel. 274 052 865, e-mail: jan.heller@csu.gov.cz
Related time series: /produkty/hdp_ts
Selected tables : http://www.czso.cz/eng/edicniplan.nsf/p/50n1-el