Czech Economic Quarterly
21.06.2013Company: Amcham
1Q13: CAPEX ALTERED CONSUMPTION AS GDP DRAG / 2Q13: PAYBACK FROM 1Q13 MAY HELP GDP QOQ / 2H13: ONLY A GRADUAL IMPROVEMENT
At a breaking point
- Recession in the Czech economy extended to its sixth consequtive quarter in 1Q13, as real GDP slumped (seasonally adjusted) 1.1% qoq and 2.2% yoy. An inventory rundown dragged GDP by a considerable 1.1% yoy, explaining most of the GDP deterioration.
- For 2Q13, we expect to see a qoq upturn and a moderation of a yoy slump. Our confidence is supported by improvements in the industrial orders, resumption of export dynamic and ongoing stabilization in retail sales at the start of the period.
- Only a gradual improvement in economic conditions is envisaged for 2H13. The sequence of recovery will go from exports via private consumption to investments. The weak 1Q13 will keep full-2013 GDP still down, -0.8%. ● We continue to believe that a deeper-rooted recovery will set in next year. GDP growth projected at 2.1% should be supported evenly by all major demand-side components.
- Monetary conditions are set to stay neutral, with an fx intervention by the CNB still not expected in our baseline scenario. Fiscal policy will cease to be a drag on GDP this year and will turn sligtly stimulating in 2014.
