Gross domestic product - 2. quarter of 2005

According to preliminary estimates, GDP increased in Q2 by 5.1% at constant prices year-on-year (y-o-y). Adjusted for seasonal variations and the number of working days, the GDP 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 obtained later. In the 1st half of 2005 thus GDP rose by 4.9% at constant prices.

On the demand side of the economy, characteristic of Q2 was a high increase (by CZK 23.8 billion) of the external balance surplus at current prices (which was even higher at constant prices), a weak increase of final consumption expenditure (by 1.8% at constant prices) and a decrease of total gross capital formation (fixed capital and change in inventories) by 4.1% caused by the development in the area of inventories.
Household final consumption expenditure rose by 2.1% y-o-y at constant prices (by 1.6% in Q1 2005). Consumers showed increased interest especially in garments, footwear, furniture, audio-visual equipment and, unlike Q1, also in transport equipment. On the other hand, they spent less for catering and accommodation services than in Q2 2004.
Final consumption expenditure of institutions coming under the government sector turned from the y-o-y drop in Q1 2005 (-3.5%) to an increase of 0.9%. This was significantly influenced by one-off inclusion of six Jas-39 Grippen fighters (as well as into imports of goods). This inclusion did not affect GDP, but if it had not 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. An increase of machinery acquisition, especially of transport equipment, was characteristic for the development in both Q1 and Q2 2005. On the other hand, investment in buildings and structures (except dwellings) dropped y-o-y. This was significantly influenced by the high comparative base of 2004 connected with the change of VAT rate in construction.
Inventories increased merely by CZK 4.9 billion in Q2 2005 (CZK +18.1 billion in Q2 2004) especially because of their absolute decrease among trading organisations.
The GDP growth was most markedly affected by external trade development, like in Q1 2005. Exports of goods increased by 7.6% y-o-y at constant prices while imports remained on the Q2 2004 level (a 0.1% decrease).
On the supply side of the economy, gross value added (GVA) reached a 5.5% increase y-o-y at constant prices, which was by 0.4 percentage points more than GDP growth. A breakdown of GVA by industry will be dealt with in the regular publications “Quarterly National Accounts of the Czech Republic” and “Czech Economy Development in the 1st half of 2005” that are to be released by the CZSO on 13 September 2005.

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

Related publications: 5001-05 Quarterly National Accounts of the Czech Republic: 2nd quarter of 2005 (also www.czso.cz)