National Accounts - 2nd quarter of 2011

In Q2 2011 gross domestic product adjusted for price, seasonal and calendar effects increased by 2.2%, y-o-y, or by 0.1%, q-o-q, according to the refined estimate. Final consumption expenditure of households and general government was further decreasing; external trade continues to be the main source of the demand growth. Total employment increased by 0.6%, y-o-y, and remained almost unchanged q-o-q.
Gross domestic product (GDP) adjusted for price effects and seasonally adjusted ^*/, increased by 2.2% in Q2, y-o-y, and by 0.1% compared to the previous quarter. The economy performance measured by GDP development was increasing already for two years; compared to Q2 2009, which was the last period of fall, the GDP is now higher by 4.6%. Development of gross value added (GVA) formation was similar except for the current quarter. During the last two years, GVA increased by 4.8%; however, in Q2 2011 it dropped after seven quarters of growth (compared to Q1 2011 by 0.8%).

Preliminary estimate of GDP growth for Q2 2011 from 16 August was reduced both in y-o-y and q-o-q comparison by 0.2 and 0.1 percentage points (p.p.), respectively. The corrections resulted from utilisation of more complex statistical and administrative data sources.

Total employment (according to national accounts methodology) increased in Q2 by 0.6%, y-o-y; compared to Q1 2011 it remained virtually unchanged. The y-o-y increase is related mainly to lower comparison base of last year. After a lump-sum decrease of employment during the first half-year of 2009 by more than 110 thousand persons, i.e. by 2.1%, the labour market has stabilised in total and the total number of employees and the self-employed has been oscillating around 5.2 million persons since Q3 2009. Thus, the growth of the economy performance was ensured solely by labour productivity growth during the last two years.

On the supply side of the economy the y-o-y growth of the total gross value added broken down by activity in Q2 2011 by 1.7% was owed especially to the contribution of manufacturing, which generated by 9.7% more GVA than a year before, which contributed by 2.3 p.p. to the total increase of GVA. Within that, positive development was recorded mainly in: machinery, automotive, metallurgical and metalworking industries. The development of value added had a negative influence on GVA especially in: agriculture, non-market services, financial and insurance activities, in which lower GVA at constant prices than last year was generated.
Comparison with Q1 2011 provides a different view of the development of both the total GVA and GVA broken down by activity. The total drop of GVA by 0.8% was contributed to by manufacturing, which was by 2.1% lower than in Q1. Primarily trade and market services recorded better results than in the previous quarter.

Individual demand components showed rather different contributions to the GDP development in Q2 2011. Positive contributions of external trade and fixed assets formation were partially eliminated by continuing decrease of household final consumption expenditure and general government, which was decreasing both in the y-o-y and q-o-q expression.

• The total 0.8% decrease of final consumption expenditure was contributed to by household expenditure (-0.7%) and general government expenditure (-1.4%). Households reduced mainly their expenditure on food, alcohol, tobacco products, furniture, and fuels. At current prices, they spent in total by 1.4% more than a year before.
• Growth of real gross fixed capital formation by 3.6% was owed to increasing expenditure on machinery and transport equipment, while investments to buildings and dwellings have not reached the level of the previous year. Nominal inventories increased during the Q2 2011 by CZK 18.2 billion (without seasonal and calendar effects adjustment), i.e. by CZK 5.0 billion more than in the corresponding quarter of 2010.
• Positive balance of nominal external trade in goods and services of CZK 54.9 bn was by CZK 2.2 bn higher than in Q2 2010, despite worsening of the terms of trade by 1.6 p.p. The real export increased by 9.4%, while import grew only by 7.9%.

In Q2 2011 gross domestic product at current prices increased by 1.9%, y-o-y, to CZK 932.7 bn, the implicit deflator of GDP dropped by 0.3%, y-o-y, mainly as a result of the different development of export and import prices of goods, when the deflator of export of goods decreased by 1.4%, y-o-y, while the deflator of import of goods was higher by 0.5%. The deflator of household final consumption expenditure, which increased by 2.1%, was against the decrease of the overall price level.

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^*/ Unless otherwise stated, all data presented in this news release are adjusted for price, seasonal and calendar effects.

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Notes:
Contact person: Jan Heller, phone (+420) 274 052 865, jan.heller@csu.gov.cz
Preliminary estimate of GDP development for Q3 2011 will be published in harmony with the Catalogue of Publications on 15 November 2011.