Investiční bankovnictví (Komerční banka)
Currencies  |  March 11, 2013 10:06:00

Czech economy throughout 2012 in recession

The year 2012 was a year of recession in the Czech economy. Although the economic downturn was not as deep as in 2009, but unfortunately it was the longest recession in history. Czech economy fell into it now with the beginning of 2012 and remained in it for the whole of last year. The reason was primarily related to declining domestic demand for consumer and investment pessimism households and firms in the light of domestic fiscal consolidation and weakening economic activity worldwide, as well as our most important trading partner, the Eurozone, fell last year to the recession.

Today's final GDP data for Q4 12 is not much different from previously published fast estimation slight revision for the worse, we noticed in the previous three quarters. Czech economy and for all of last year, declined in real terms by 1.2%.Given that the overall price level measured by the deflator rose last year by 1.3%, GDP at current prices in 2012 recorded minimal growth of 0.1% to a total of 3,844 billion CZK.

A negative shock to domestic demand was immediately enter the year 2012, which was marked by another wave of fiscal restraint consisting inter alia, increases in indirect taxes and lower social transfers and investment funds for public investment. Decline in real household disposable income, combined with extreme pessimism Czech consumers has led to an unprecedented drop in household consumption, the yearly assessment by 3.5%. However, in Q4 12 already QoQ household consumption by 0.9% q / q increase.The decrease in investment activity of firms and thus fall in gross fixed capital of 1.6%, in addition to fiscal consolidation has signed an uncertain global environment associated with the ongoing European debt crisis and the subsequent collapse of the whole European economy into recession. On the home front, however, the company had to face significant uncertainty and volatility of the business, especially the tax environment, while still at the end of 2012 it was not clear how it will look like fiscal adjustment in 2013. In the second half of 2012 was on the Czech economy is still more apparent weakening of foreign demand in connection with the recession in the eurozone. In Q4 alone, 12 fixed investment fell by 3.8% q / q. From the demand perspective, the only positive contributor, despite the obvious deterioration of external demand, net exports. A positive contribution of 1.8 percentage point fall in domestic demand, but not enough to compensate.

In terms of gross value added formation last year was the most successful manufacturing industry, although in the last quarter of last year, was also in this segment recorded a decrease in yearly assessment only this sector stagnated. Others to be worse off. A further significant reduction of 6.3% was recorded in construction last year. Construction output is already in terms of the level reached values ??below 2005. The reason for the decreasing investment activity on the part of companies, fiscal consolidation manifested by the absence of large infrastructure projects funded from public sources and weak household demand for new properties. Agriculture then paid for last year's adverse weather conditions and the related year's crop.

Czech economy is expected to be in recession at the beginning of this year, however, from the second quarter, we expect a gradual recovery. Consumer demand is expected to remain subdued, households are likely to further investigate at least in the first half of this year. Cautious in investment activity will remain and businesses. Total GDP this year to decline by 0.1%. Significant positive contribution can again expect only from net exports. Next year should continue the gradual recovery of the Czech economy, for the full year 2014, we expect average GDP growth of 1.4%.

Author: Jan Vejmělek

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