Quarterly National Accounts - 2. quarter of 2008

 
In Q2 2008 gross domestic product adjusted for price, seasonal and calendar effects grew by 0.9% in comparison to Q1 2008 and by 4.6% in comparison to Q2 2007. Seasonally adjusted total employment increased by 0.2% compared to Q1 2008 and by 1.7% compared to Q2 2007.
According to updated estimates based on more information from statistical surveys and administrative data sources, real gross domestic product (GDP) increased by 0.9% quarter-on-quarter (q-o-q) and by 4.6% year-on-year (y-o-y). ¹ The preliminary estimate of y-o-y GDP growth of 14 August has been corrected upwards by 0.1 percentage point (p.p.). At the same time, the estimate of y-o-y GDP growth for Q1 2008 has been updated to 5.4%; in total GDP for the first half of the year increased by 5.0%.
 
While GDP recorded nearly the same q-o-q growth in both Q1 and Q2 2008 (0.9% after rounding), the y-o-y GDP growth further slowed down in Q2 2008. The underlying reasons can be seen in a combination of external and internal effects. Among the external ones were the gradual appreciation of the koruna and decreasing terms of trade affected mainly by the commodity price development (especially petroleum prices) which, together with the economic slowdown in Germany, the biggest trading partner, had an overall negative impact on the economic activity of the business sector. The main internal reason for the slowdown in total demand was relatively low changes in inventories in comparison to Q2 2007. On the other hand, GDP demand was driven by external trade where markedly higher demand than supply resulted in a high surplus of external trade in goods and services. Manufacturing proved its key position on the supply side of the economy; it made up nearly 70% of the growth of total gross value added.
 
Development of GDP expenditure components:

• The y-o-y increase of final consumption by 2.8% in Q2 2008 represented a contribution of 1.9 p.p. to GDP growth. Final consumption was affected by increase in household expenditure by 3.2% (nominal increase 9.4%). General government expenditure classified to final consumption expenditure grew by 1.8%.
• Gross capital formation was 4.7% below the level of Q2 2007 and had a negative contribution of 1.3 p.p. to GDP growth. Gross fixed capital formation increased by 4.0% y-o-y; investment in dwellings, machinery and equipment (excl. transport vehicles) and non-residential buildings was the main source of GFCF growth. However, changes in inventories were considerably lower in comparison to Q2 2007 and had a negative contribution of 2.2 p.p. to GDP growth.
• External trade in goods and services was the main source of economic growth in Q2 2008 and contributed by 4.0 p.p. to GDP increase. Exports of goods and services retained the high y-o-y rate (13.5%), whereas imports slowed down to 8.9%.

 
Gross value added (GVA) at constant prices increased by 4.6% y-o-y, mainly due to manufacturing, which grew by 11.6% and was the far biggest contributor to total GVA growth. Also wholesale and retail trade, transport and services contributed to GVA growth. Agriculture was markedly below the level of Q2 2007.
 
Nominal gross domestic product increased by 6.7% y-o-y, which is the lowest figure in the last two years. In comparison to previous quarter, GDP grew by a mere 0.7%; a lower q-o-q growth was recorded only once in the last five years (in Q1 2005). GVA at current prices increased even less than GDP (+5.8% y‑o‑y and 0.6% q-o-q). The reasons can be seen in export and import prices, exchange rate of the koruna and terms of trade. The heaviest impact of the price development was felt in manufacturing where GVA at current prices decreased by 0.7%.
 
Increase in the overall price level by 2.0% measured by the GDP implicit deflator was influenced by considerably different trends of domestic prices and external trade prices, whose impacts partly compensated each other (y-o-y increases of household expenditure and fixed capital formation deflators by 6.0% and 2.0% respectively on the one hand, and decreases of export and import prices by 7.8% and 5.4% respectively on the other hand). The GVA deflator grew by 1.2% y-o-y, and the impact of price changes varied considerably – deflator increased by 37.1% in agriculture and declined by 11.0% in manufacturing.
 
Growth of employment by 0.2% q-o-q and 1.7% y-o-y (adjusted for seasonal effects) contributed to the increasing economic performance. Labour productivity, measured by gross value added per employed person, increased by 2.8% y-o-y. Employment in the whole economy (according to the national accounts methodology) was 5 233 thousand persons on average in Q2 2008, i.e. by 89 thousand more than in Q2 2007. 
EU27 GDP increased by 1.6% y-o-y in Q2 2008 according to the Eurostat’s first estimate of 3 September 2008; Euro area GDP grew by 1.4%. GDP growth was 7.6% in Slovakia, 6.1% in Poland, 2.3% in Austria, 1.8% in Hungary and 1.7% in Germany.
 

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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
 

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¹ Unless otherwise stated, all the data are at constant prices and adjusted for seasonal and calendar effects.