• GDP in the 1Q07 increased by 6.1% y/y. As expected, household consumption dragged Czech economy in the first quarter up. Surprisingly low levels were reached by investments while foreign trade contribution was negative.
• Consumer prices index in May increased by 0.4%. Inflation decreased to 2.4% y/y from 2.5% in April. Higher excise tax with tobacco products and more expensive fuels were the main inflation factors.
• Number of unemployed in May declined to 383k and corresponding unemployment rate decreased to 6.4% from 6.8% in April. Strong economy growth continues to increase number of vacancies.
• According to minutes from Czech National Bank board meeting, bank is valuating forecast risks as pro-inflationary. In economy, counter inflation factors are ceasing to function which brings interest rates convergence to monetary policy neutral level.
• Government’s reform package passed first reading in the Lower Chamber of Parliament. 113 out of 197 MPs present voted for reforms progress to the second round reading.
• G8 claimed that world economy is in a good condition. Also, it asked countries with high balance of trade surplus to ease currency exchange rate and contribute to disequilibrium mitigation. This appeal is mainly indicated for China.
• Slovakia’s industrial production in April increased by 14.9% y/y which is slightly below estimates. Retail sales are in line with expectations as they reached 6.2% growth.
• Bank of England left interest rates unchanged and prime reference rate remains at 5.5%. This decision is in line with market expectations.