KBC Market Research Desk
KBC Bank
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GDP revision improves Czech growth outlook
Forint at 9-month high
The Czech statistical office has painted a more favorable picture of the Czech economy today than was that suggested by preliminary figures. According to today’s release, the Czech GDP grew by 0.4 % q/q in 2014Q4 (by 0.2 percentage points more than the first release had guessed). In annual terms, GDP increased by 1.5 %. Regarding the growth structure, the economy was more than expected driven by domestic demand and investments. The Czech economic growth has thus been transforming from an export-dependent to a domestic-demand-driven one, creating thereby, in our view, a solid base for future growth. Low inflation has obviously not harmed the economy so far. Rather the contrary appears to be true. Capped by falling commodity prices, low inflation has improved financial situation of households and encouraged them to raise their real spending. In spite of the beneficial impact of weaker koruna on the economy, though, we do not believe that the CNB would consider shifting the current intervention threshold of the koruna unless the currency spontaneously strengthens close to the limit of 27 EUR/CZK, which central bankers had committed themselves to defend.
Regarding other CEE markets, the Hungarian forint continued its rally yesterday and hit its 9-month high. The forint remains to be supported by positive fundamentals together with a less dovish statement of the NBH following its last rate-setting meeting. No wonder then that relatively high yields of Hungarian bonds have been attracting robust demand.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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