Investiční bankovnictví (Komerční banka)
World markets  |  December 07, 2012 16:40:00

GDP underscored the weakness of domestic demand

Domestic currency during this week were in the range less than 20 cents and did not record significant fluctuations. At the end of the week firmed slightly below 25.20 CZK / EUR. Even against the dollar in the first half of the week fluctuated in a narrow range, but from Thursday's ECB meeting euro weakened sharply against the dollar and it tripped a dollar to the crown. The reason for this comment was governor of the ECB Mario Draghi, who stated that the Board discussed the possibility of lower interest rates. At the same time the bank also revised its forecast for GDP growth and inflation down. Euro, nor for the October industrial production in Germany and lower forecasts German central bank. Although the Bundesbank does not expect a protracted slowdown, and it expects quick return to the path of growth, however, pointed to the possibility that Germany will enter at the end of the recession.From the United States, then published a surprisingly good data out of the labor market, dollar gains further spread. The U.S. currency so the last two days tripped about 30 cents and at the end of the week it can be bought at prices around 19.50 crowns.

This week we saw the first regular and indicators. Most attention has focused on the revised GDP data for Q3 12th He practically in line with the preliminary estimate dropped by 0.3% q / q, respectively, 1.3% y / y. The structure also did not bring any major surprises. Practically the only driver remain net exports, which cushioned fall in household consumption and investment. Statistical Office also revised the data for previous quarters. Thanks to the Czech economy is in recession since the first quarter of this year, and not since the third quarter of last year, which showed on the previous data.The positive impact of net exports would but unfortunately had to reduce in the coming quarters, while the scope for an increase in domestic demand in the near future we can not see. Domestic economy will be flirting with recession and the beginning of next year. A slight recovery is expected in the second half of the 2013th

Similarly sounded as data on foreign trade and retail sales for October, which together highlighted the image of weak domestic demand and gradually declining interest in Czech goods from abroad. Next week will be published next indicators. Industrial production is expected to record a growth of 3.5% y / y due to a higher number of working days after their cleaning should, however, decrease by 2.0%. Enterprises are also very cautious in hiring new workers and a decrease in production can however expect layoffs.Similarly, it is also in the building, which also působní negative seasonal effects, which should increase the overall unemployment rate in November to 8.7%. Due to weak consumer demand in the economy there is demand pressures. This should confirm the information on the November consumer prices, which are expected to mom stagnation, year on year in October, a slowdown from 3.4% to 3.0%.

Scope for strengthening the crown by us is very limited. By the end of the year, we expect the domestic currency moves to weaker levels than on which is now located. The published GDP was disappointing for the central bank, and although now expect that the CNB entered the market to direct foreign exchange interventions, fear of them will strengthen the defense.Moreover, in the words of Vice-Governor Mojmir Hampl Czech economy stopped its convergence towards the richer western countries, which implies that there is no reason for the strengthening of the Czech crown. Domestic currency and could thus react more to inflation Monday, when it is full, or even our estimates will be underneath (consensus indicates a milder slowdown to 3.1% y / y). Now any growing deflationary pressures would have prompted the central bank to take action.

Author: Miroslav Frayer

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