Analysts expect slight economic revival in Q2

Prague, March 11 (CTK) - The Czech economy stayed in recession at the beginning of this year but a slight revival might come in the second quarter of this year, according to estimates of analysts polled by CTK yesterday.

For full 2013, analysts expect the domestic economy to stagnate or decrease slightly.

According to data released by the Czech Statistical Office (CSU) yesterday, Czech gross domestic product (GDP) fell by 1.2 percent last year. GDP fell also in Q4 2012 alone, by 1.7 percent year-on-year and by 0.2 percent against the previous quarter.

"The revised data on GDP confirmed an annual fall in the fourth quarter, which sent the Czech Republic to the eight worst position among EU countries in year-on-year comparison. Besides the crisis-hit countries from the southern wing of the euro zone, Hungary was the only one to rank worse than the Czech Republic," UniCredit Bank analyst Pavel Sobisek said.

The euro zone's GDP fell by 0.6 percent last year. The EU as a whole registered a GDP fall of 0.3 percent. German economy last year grew by 0.7 percent, compared with 3 percent in 2011.

According to Komercni banka analyst Jan Vejmelek, the Czech economy will be in recession for the entire first quarter. "In the second quarter, however, we expect a gradual revival. Consumer demand should stay subdued. Households will most likely continue economising for the first half of this year at least," Vejmelek said.

GDP should fall by 0.1 percent this year, according to Vejmelek.

"For this year we expect the Czech economy to fall by 0.2 percent," Raiffeisenbank analyst Vaclav France said. The decrease should continue throughout the first quarter in connection with the VAT rise. Then the Czech economy should start reviving gradually," France said.

"The biggest cut in the economic performance last year was made by the consumption behaviour of households. The fall of their real consumption by 3.5 percent for the full year had been unseen since 1995 at least," Sobisek said.

According to Sobisek, Czech households intensified their saving strongly. In addition, there was short-term factor in the form of extreme uncertainty over taxes before the end of the year," he noted.

For the full 2013 Sobisek said he expected the economy to grow by 0.4 percent.

"Surprisingly, after many years it was not caused so much by development in the world as by development at home. The main reason behind the fall of the economy is a drop of domestic demand. People simply tend to put off consumption," Next Finance analyst Vladimir Pikora said.

In 2013, the Czech economy should fall by 0.5 up to 0.8 percent, according to Pikora.

"For this year we forecast a slight economic growth at the level of 0.3 percent. A risk lies in worse development abroad, which could lead to a weaker external demand due to which our economy could stay in recession this year," GE Money Bank analyst Petr Gapko said.