Quarterly GDP refined estimate - 4th quarter 2009

In Q4 2009 gross domestic product adjusted for price, seasonal and calendar effects fell by 3.1%, y-o-y. Total employment dropped by 1.9%. Over the whole year 2009 the real GDP was 4.1% down, compared to the previous year, while employment fell by 1.2%, on average.
The Czech Statistical Office apologizes for the delayed release of the regular information National accounts and time series of quarterly national accounts. It was caused by unexpectedly obtaining new information on value added tax in Q4 just before the release. As the new data changed significantly the economical development in Q4, it was decided to postpone the release from 9 to 14 o’clock. This shift allowed including new data and publishing the up-to-date indicators.
Economic performance measured by GDP development ^*/ adjusted for price, seasonal and calendar effects, increased by 0.7% in Q4, compared to the previous quarter. The sign of the economy recovery recorded already in Q3 was thus confirmed in Q4.

In the year-on-year comparison GDP dropped in Q4 by 3.1% and by 4.1% in total for the whole year 2009. Much smaller y-o-y drop of GDP in Q4 compared to Q1-Q3 2009 was mainly due to low comparable basis in in the end of 2008. After a significant slump in Q1 2009 the economy was falling also in Q2 when GDP was in comparable time series the lowest for the last three years. In Q3-Q4 2009, y-o-y drop was not so much considerable, but the economy dropped over the whole year 2009 below the 2007 level.

The corrected GDP estimate including industrial structure of resources and expenditure items was compiled using more complete annual and quarterly information not available at the time when the GDP preliminary estimate was formed (12 February) and, therefore, missing information had to be replaced by estimates and model calculations as usually. Subsequently, it has showed that especially a preliminary estimate of development of indirect taxes in Q4 compiled by Ministry of Finance and results of model calculations for some missing indicators both of administrative and statistical data sources including their allocation to individual quarters unfortunately partially differ from actual values. The original estimate of the y-o-y drop of GDP 4.2% in Q4 was therefore corrected to 3.1% and the GDP estimate for the whole 2009 from 4.3% to 4.1%.

Along with the release of more accurate estimates the updated methodology for calculation of household final consumption expenditure and calculation of amounts paid for imports of services were used. These adjustments, however, do not affect methodology of calculation of either GDP level or its development. The detailed description of mentioned changes is shown in the special annex.

Seasonally adjusted employment (according to national accounts methodology) increased by 0.2% in Q4, q-o-q, and, by contrast, in the year-on-year comparison it was 1.9% down. In 2009 the national economy employed 5 226 thousand persons, on average, i.e. by 62 thousand less (-1.2%) compared to 2008. Employment was falling over the year and in Q4 2009 the national economy lost 63 thousand persons on average compared to Q1.

On the supply side of the economy the contributions of individual industries to the y-o-y drop of real gross value added (GVA) over the whole year 2009 by 4.4% were markedly differential. In manufacturing, the most important industry in terms of volume, the GVA formation, after the q-o-q slump in Q1 by more than 10%, gradually stabilized and in the second half-year GVA showed q-o-q no decline. By contrast, in trade and business services more marked q-o-q drops of GVA were recorded also by the year-end. More notable increases were recorded (except for Q1) in financial and insurance activities and owing to telecommunication services also in transport and communication. In 2009, positive contribution to the GVA growth at constant prices came from agriculture, however, at current prices the GVA fell (in agriculture) due to a marked price drop in outputs.

Individual demand components showed rather different contributions to the development of economy:
The total annual 1.2% increase of final consumption expenditure contributed positively by 0.9 p.p. to the GDP growth. This growth was contributed to by general government expenditure. Nominal household expenditure increased, y-o-y, by slight 0.1%, however, with respect to the price deflator, real household expenditure fell by 0.2%. While in the 1 ^st half-year the household expenditure did not nearly change, q-o-q, in Q3 and especially in Q4 it gradually declined by 0.5% and 0.6%, respectively.
Drop of real gross capital formation in 2009 by 17.9% had a negative impact on GDP (-4.5 p.p.). The gross fixed capital formation was lower, y-o-y, by 8.3% with a negative contribution (-2.0 p.p.) to the GDP development. In the q-o-q comparison the fixed capital formation has stabilized following a marked drop in Q1 by 4.7%. Inventories gradually declined over the year to reach the total nominal drop by CZK 42.5 billion by the end of 2008.
Overall annual balance of external trade (net exports) in goods and services was by 9.9% lower compared to 2008 with identical annual drop of total exports and imports resulting into negative impact (-0.4 p.p.) on GDP. Bigger y-o-y drop of imports of goods compared to exports (-14.5% and -13.0%, respectively) were fully offset by an opposite development in revenues and expenditures on services whose exports increased by 9.8% while imports by 24.5%.

In 2009 gross domestic product at current prices fell by 1.5%, y-o-y, to CZK 3 630.4 bn. The overall price level measured by GDP implicit deflator grew by 2.7%, on average. Over the year, the deflator gradually declined (from 3.7% in Q1 to 1.4% in Q4).
In Q4 2009 gross domestic product in EU 27 adjusted for seasonal effects was, by Eurostat estimate, 0.1% up, q-o-q, while in the y-o-y comparison it fell by 2.3%. Among our key trading partners GDP fell in Q4 2009 in Hungary (-5.3%), Slovakia (-2.7%) and in Germany (-2.4%) while in Poland a 2.8% growth was recorded.

In compliance with the Catalogue of Publications the GDP preliminary estimate for Q1 2010 will be published on 12 May.

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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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Contact: Jan Heller, phone (+420) 274 052 865, e-mail: jan.heller@csu.gov.cz
Related time series: /produkty/hdp_ts
Selected tables: /produkty/selected-tables-of-quarterly-national-accounts-4-quarter-i442mlk281