Gross domestic product - 4. quarter of 2006

Real GDP grew by 6.1% year-on-year in 2006, like in 2005. However, the structure of the growth changed markedly. While the main source of growth in 2005 was improving external trade balance, in 2006 it was final consumption expenditure and gross capital formation.
Fourth quarter of 2006

According to preliminary estimates, real GDP increased by 5.8% in Q4 2006, compared to Q4 2005; adjusted for seasonal variations and working day effects, GDP grew by 1.4%, compared to Q3 2006. The same quarter-on-quarter increase (+1.4%) in all four quarters of the year shows a stabilised economic growth in 2006. Simultaneously with the release for Q4 2006, updated GDP estimates for the three previous quarters of 2006 are published. Updated estimate for Q1 2006 (6.4%) is unchanged; estimates for Q2 and Q3 2006 are slightly increased (from 6.0% to 6.2% and from 5.8% to 5.9% respectively).

On the demand side of the economy, household final consumption expenditure rose dynamically (by 5.4% year-on-year at constant prices, after +4.3% in previous two quarters), gross fixed capital formation increased by 7.6% (i.e. roughly the same growth as in previous three quarters). Increase in inventories was by CZK 6.2 billion higher than in Q4 2005 (at current prices). Increase in the value of exports of goods and services was higher than in the value of imports of goods and services by 0.7 percentage points at current prices, but after deflation to constant prices the relation reversed and imports grew by 0.7 percentage points faster than exports.

On the supply side of the economy, the total increase of 6.1% (at constant prices) in gross value added was mainly due to ‘manufacturing’ (+12.8%), ‘construction’ (+6.5%) and ‘wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods’ (+6.8%). Conversely, agriculture shrank by 11.2% year-on-year.

Gross GDP at current prices grew by 8.5% year-on-year and reached CZK 839.4 billion in Q4 2006. The overall price level rose by 2.5%, like in Q3 2006, but the rise in Q4 2006 was affected especially by development of exchange rates in external trade, while in Q3 2006 mainly by growth of consumer prices.

Among selected total economic indicators (according to national accounting methodology), total employment (incl. the self-employed) increased to 5 135.6 thousand persons, both year-on-year (by 94.0 thousand) and quarter-on-quarter. The number of employees rose to 4 213.0 thousand persons (+1.9%) and wages and salaries grew by 7.6% year-on-year.


Year 2006

Real GDP increased by 6.1% year-on-year, i.e. the same rate as in 2005. However, the contributions of individual demand components to total economic performance in 2005 and 2006 differed. While the key role in economic growth in 2005 was played by sharp improvement of economic output for exports, economic growth in 2006 was driven by final consumption expenditure and gross capital formation.

On the demand side of the economy, household final consumption expenditure grew by 4.6% at constant prices and by 7.0% at current prices, i.e. faster than gross disposable household income, which increased only by 5.8%. Gross fixed capital formation at constant prices was by 7.3% higher than in 2005; investments in transport equipment (+25.1%) and investments in other machinery and equipment (+8.5%) rose fastest. Government final consumption expenditure in total grew by a mere 0.3% because the comparable basis of 2005 was high due to lease of Jas-39 Gripen fighters. A significant increase of CZK 72.7 billion (current prices) was recorded for total inventories (of which materials grew by CZK 26.1 billion, goods by CZK 23.7 billion and work in progress and finished goods by CZK 22.9 billion). External trade registered growth of total exports and imports by 13.3% and 13.6% respectively at current prices; the balance of goods (CZK +44.4 billion) as well as the balance of services (CZK +12.4 billion) reached a surplus. At constant prices, the relation between growth of exports and growth of imports was reverse, exports being up by 14.6% and imports by 14.2%.

On the supply side of the economy, the total increase of 6.4% (constant prices) in gross value added was mainly due to ‘manufacturing’, through growth by 14.0%. ‘Manufacturing’ participated with only 26.3% in gross value added produced, but with as much as 56.7% in gross value added increase. Within ‘manufacturing’, the highest increases were recorded for ‘manufacture of motor vehicles, trailers and semi-trailers’ (+31.7%), ‘manufacture of machinery and equipment’ (+25.7%), ‘manufacture of rubber and plastic products’ (+24.8%), ‘manufacture of fabricated metal products’ (+20.2%) and ‘manufacture of wood and wood products’ (+15.0%). Gross value added at constant prices dropped particularly in agriculture (-7.2%).

Nominal GDP grew by 7.9% year-on-year and reached CZK 3 204.1 billion in 2006. The overall price level measured by GDP implicit deflator increased by 1.7% compared to 2005; it was higher in final consumption expenditure (+2.8%) and gross capital formation (+0.8%), and lower in total exports (-1.1%) and exports (-0.5%).

Average total employment was 5 087.5 thousand persons in 2006, of which 4 170.0 thousand persons were employees who received wages and salaries amounting to CZK 1 040.5 billion.

EU 25 GDP grew by 2.9% in 2006, according to estimate released by Eurostat (of which by 3.4% in Q4 2006). Among the Czech Republic’s main trading partners, GDP in Slovakia increased by 8.3%, in Poland by 5.8%, in Hungary by 3.9% and in Germany by 2.7%.

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Contact: Jan Heller, phone (+420) 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