ČBA cuts Czech GDP outlook for 2013 from growth to zero

Prague, Jan 10 (CTK) - The Czech Banking Association (CBA) expects the Czech economy to stagnate this year in its updated forecast, while in October it estimated that the economy would grow by almost 0.5 percent in 2013, CBA representatives said at a press conference Thursday.

The economy is to recover in 2014 when gross domestic product (GDP) is to increase by 1.9 percent, the CBA said.

For the year 2012, the CBA reckons with a 1.1 percent economic fall.

"Households' consumption dropped in 2012 at a faster pace than would correspond to the development of their disposable incomes. The slump of domestic demand became the main reason behind the economic fall in the year 2012," Ludek Niedermayer of CBA said.

"A turnaround in this development can be expected this year, which is positive news," Niedermayer said.

The Czech National Bank (CNB) said in its latest forecast released in November it expects a very moderate increase of the economy of 0.2 percent this year. The Finance Ministry estimates in its latest forecast from October that the economy will expand by 0.7 percent in 2013.

The banking sector will probably register a positive growth of loans as well as deposits this year despite stagnation of the economy, according to the CBA's forecast.

The CBA expects an increase of loans to households of 3.5 percent and a growth of loans to non-financial companies of 1.6 percent for this year. It expects the growth to accelerate next year.

The CBA makes public its forecast quarterly. The latest forecast is based on contributions of analysts from banks CSOB, Ceska sporitelna, Raiffeisenbank, UniCredit Bank, Komercni banka and GE Money Bank.

CBA's estimates
2013 2014
GDP development in % 0 1.9
Inflation 2.4 % 2.2
Kc/EUR rate 25.32 24.40
Growth of bank loans to households (%) 3.5 4
Growth of bank loans to non-financial companies (%) 1.6 3.5

Source: CBA