Czech Watch - 26 June 2001

GDP in constant price increased by 3.8%, year-on-year, in the 1st quarter and 1.1%, quarter-on-quarter (seasonally adjusted). GDP growth was led by positive change of inventories, higher demand for gross fixed capital and higher household final consumption expenditure. On the other hand worsening net exports and a decline of government consumption expenditures affective the GDP growth figure negatively.

Marie Bohatá, chairwoman of Czech Statistical Office, announced her expectations of GDP growth for the second quarter. She estimates an increase of 4.4%, year-on-year.

Vaclav Klaus, chairman of Lower House, warned that current economic performace should not be maintained in future. He warned against increasing public deficit and current account deficit. According to him, it is necessary to undergo a "deep cut" in public deficits.

The Czech National Bank CNB estimates GDP growth at 3 pct this year, and for next year it expects the economy to grow faster, CNB Bank Board member Michaela Erbenova said at the Interview 21 conference. The first-quarter GDP growth of 3.8% was higher than predicted by the central bank. However, it was said that the CNB assessment of the economic development and outlook should not change.

Goldman Sachs, adviser for the sale of a 60% share in Komercni banka, will present a report on the progress in the sale to Finance Minister Jiri Rusnok this week and the cabinet should then decide on the sale this week or at the start of next week.

The Czech koruna rose to near an all-time high to the euro, after the country's economy grew an 3.8% in the first quarter. The koruna rose to as much as 33.86

(David Marek)