GDP growth in 4Q/08 was revised down to -0.9% q/q from -0.6% q/q printed in the flash estimate. The whole year GDP figure dropped to 3.1% from previously stated 3.5% as there was a negative revision also in 3Q.
Falling net exports are the main reason behind decreasing GDP. Exports fell by 7.6% from previous quarter, while imports declined by 5.7%. Worsening financial results and tighter credit conditions hampered investment activity. Fixed capital formation decreased by 0.5% q/q in 4Q. Positive impulse came from household consumption expenditures and government spending both rising by 0.6% q/q. GDP fall would be much stronger without stockpiling inventories. A quick calculation shows that GDP would decrease by 1.8% q/q without an extraordinary size of inventories.
The Czech economy is a typical example of small open economy, moreover with fragile structure and high concentration of its production base. Thus, it would be a miracle to escape global economic problems. CEE region as well as South-East Asia are the latest victims of the financial crisis. It is hard to make any estimates if the financial crisis remains unresolved and credit channels not functioning. Recession came to the Czech Republic from Euro zone and it can disappear the same way. The Czech government works on stimulus measures, however, it can only cushion a way down.
Actual figure: -0.9% q/q and +0.7% y/y
Previous flash estimate: -0.6% q/q and +1.0% y/y