Czech Economic Quarterly - Czech Economic Quarterly
17.03.2016Company: Amcham
In 4Q15, real GDP posted a 4.0% yoy growth, bringing the full-2015 dynamic to an eight-year high of 4.3%. The qoq GDP was flat. Both private and government consumption continued powering ahead, while fixed capital formation proved again to be the most dynamic demand-side component in yoy terms. The inventory change, however, was negative for the first time since 1Q14.
■ There is enough evidence that key positive trends in the economy have been transferred into 1Q16, which should keep boosting domestic consumption. In terms of fixed capital formation, though, the situation looks a bit less upbeat. The inventory rundown as well as pending construction orders from 4Q15 suggest that the stock of unfinished investment projects has gone sharply down.
■ We are revising our 2016 GDP forecast one notch down to 2.2% solely due to the weaker carryover from the lower-than-expected GDP growth in 4Q15. We acknowledge that global risks have risen since the start of 2016. However, we find our standing local forecast conservative enough to stay consistent with a new global baseline scenario.
■ As to the CNB policy, we argue that corporate flows rather than financial market speculations stand behind the current demand for CZK. This makes us believe that chance for imposing a negative rate by the CNB is slim.
