Quarterly National Accounts - 3. quarter of 2008

In Q3 2008 gross domestic product adjusted for price, seasonal and calendar effects grew by 0.9% in comparison to Q2 2008 and by 4.2% in comparison to Q3 2007. Seasonally adjusted total employment increased by 0.4% compared to Q2 2008 and by 1.9% compared to Q3 2007.
According to an updated estimate, real gross domestic product (GDP) increased by 0.9% quarter-on-quarter and by 4.2% year-on-year (not seasonally adjusted GDP grew by 4.3%). ¹⁾  In total for Q1-Q3 2008, GDP was up by 4.6% year-on-year. The preliminary estimate of GDP growth for Q3 of 15 November 2008 has been corrected downwards by 0.5 percentage points (p.p.). The main reasons for this correction were either new or by respondents subsequently updated input information on the one hand, and increase in GDP implicit deflator on the other. This resulted from the difference between the structure of GDP expenditure components that was first estimated and then updated only after flash estimate taking into account the results of statistical surveys.
 
Simultaneously with Q3 estimate,  in the framework of the full set of annual national accounts for the year 2007 published in accordance with the Catalogue of Publications already on 1 October 2008 on the CZSO website, the corresponding quarterly indicators have been updated. The GDP corrections are as follow: 
Due to the combination of external and domestic effects, the growth of the Czech economy measured by GDP slowed down further in Q3 in spite of increase in total employment. Among the external affects were economic cooling in countries - the main trading partners of the Czech Republic and resulting increase of marketing difficulties of export-oriented producers. These problems were aggravated by the strong koruna and price development of petroleum products. The main domestic reason for the gradually decreasing growth of GDP was, like in the previous quarters of 2008, a lower increase in real growth of final household consumption expenditure caused particularly by the y-o-y increase of consumer prices. The main actor of economic growth was increasing external trade surplus. On the supply side of the economy, manufacturing and wholesale and retail trade were the biggest contributors to increasing total gross value added (GVA).
 
Development of GDP expenditure components:

• The y-o-y increase of final consumption by 2.7% in Q3 2008 represented a contribution of 1.9 p.p. to GDP growth. Final consumption was affected particularly by increase in household expenditure by 2.5% (nominal increase 8.4%). Government expenditure grew by 3.7%; especially expenditures of health insurance companies on in-patient services were up.
• Gross capital formation was 2.0% below the level of Q3 2007 and had a negative contribution of 0.5 p.p. to GDP growth. However, gross fixed capital formation alone increased by 4.5% y-o-y; investment in transport equipment and in machinery and equipment was the main source of GFCF growth. Increase in inventories was considerably lower in comparison to Q3 2007 (CZK 13.0 billion as against CZK 24.8 billion, current prices) and had a negative contribution of 1.6 p.p. to GDP growth.
• Like in the previous quarters, external trade in goods and services was the main source of economic growth in Q3 and contributed by 2.8 p.p. to GDP increase, despite a considerable fall in y-o-y growth rate of exports (from 13.9% in Q2 to 5.0% in Q3). That was due to a marked fall in corresponding growth rate of imports (from 9.7% to 1.6%). External trade thus remains the decisive source of GDP growth.

 
Gross value added (GVA) at constant prices increased by 4.6% y-o-y, mainly due to industry, which grew by 5.0% and was a significant contributor to total GVA growth. Nearly the same contributor to GVA growth was wholesale and retail trade, which has a lower weight than industry but recorded a 16.1% increase. Above-the-average GVA growth at constant prices was registered also in agriculture, despite a fall at current prices due to the y-o-y decrease in prices.
 
Nominal gross domestic product increased by only 5.2% y-o-y; in comparison to previous quarter GDP grew by 1.2%. Real GDP growth by 4.2% y-o-y was due to a higher overall price level measured by the GDP implicit deflator which grew by only 0.9%. The lower deflator growth was affected by a marked decrease of terms of external trade which nearly compensated for the increase of (especially) consumer prices.
 
Growth of employment by 0.4% q-o-q and 1.9% y-o-y (adjusted for seasonal effects) contributed to increasing economic performance. Labour productivity measured by gross value added per employed person increased by 2.3% y-o-y. Employment in the national economy (according to the national accounts methodology) was 5 327 thousand persons on average in Q3 2008, i.e. by 98 thousand more than in Q3 2007. 
EU27 GDP increased by 0.8% y-o-y in Q3 2008 according to the Eurostat’s estimate of 4 December 2008 (compared to the previous quarter, EU27 GDP dropped by 0.2%). GDP growth was 7.1% in Slovakia, 5.6% in Poland, 1.5% in Austria, 1.0% in Hungary and 0.8% in Germany.
 
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¹⁾ Unless otherwise stated, all the data are at constant prices and adjusted for 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: http://www.czso.cz/eng/edicniplan.nsf/p/50n1-el