National Accounts - 4th quarter of 2010

GDP up by 2.2% in 2010, of which in Q4 by 2.6%

Estimate of year-on-year (y-o-y) growth of the gross domestic product for the year 2010 was reduced from 2.3% to 2.2%, of which for Q4 from 2.9% to 2.6%. Total employment in 2010 decreased by 0.8% compared to 2009; however, in Q4 2010 it increased by 0.3% compared to Q3 2010.

In Q4 2010 real GDP increased by 2.6%, y-o-y, according to the refined estimate (adjusted for seasonal and working day effects); in comparison to Q3 2010 the GDP was higher by 0.3%. Preliminary estimate of the y-o-y growth published on 15 February (2.9%) was refined mainly due to a correction of indirect taxes development as it resulted from the processing of relevant tax returns related to Q4 2010.

The GDP growth by 2.6% in Q4 was a result of two contradictory trends - taxes on products, which are part of GDP, decreased significantly at comparable prices by 8.8%, y-o-y, while gross value added for all industries in total increased markedly by 4.1%. The same as in previous quarters, there was a decisive influence of manufacturing industry, which generated at comparable prices by 16.7% bigger value added than in Q4 2009. Especially the following industries contributed to the growth: manufacture of transport equipment, machinery, and electrical equipment. Also trade and business services recorded above-average growth. On the contrary, a decrease of gross value added at comparable prices was recorded (the same as in Q3) in agriculture, which had to cope with unfavourable climate conditions in the second half of 2010. Also construction was not well off; it was affected (similarly as in the previous quarters) by a decrease in investment activity. Without adjustment for working day effect, GDP in Q4 2010 increased by 2.9%, y-o-y.

Development of individual components of demand for goods and services was markedly differentiated in Q4 2010. Households and general government final consumption expenditure decreased, y-o-y, by 0.4% and 1.6%, respectively. Also gross fixed capital formation decreased (the same as during the entire year 2010). On the contrary, inventories were increasing also during Q4, when enterprises otherwise usually empty their warehouses. Thanks to that, the gross capital formation in total increased by 11.2%. External trade experienced dynamic growth despite unfavourable development of terms of trade; exports increased by 16.8% and imports by 17.3%.

In the total for 2010, the GDP was higher by 2.2%, y-o-y. However, development of both components of GDP formation was markedly different; while gross value added increased by 3.1%, taxes on products dropped by 4.8%. The economy grew mainly thanks to manufacturing industry. Gradual restoration of economic boom abroad and the demand related to that provided space for industries oriented on exports and they utilised that. It is true mainly for manufacture of transport equipment, machinery and electro engineering industry. Above-average results were reached also in market services and trade. On the contrary, gross value added formation decreased in construction (due to drop in the volume of orders) and in the second half-year also in agriculture. The GDP development was negatively influenced also by reduction of budget expenditure of organizations belonging to general government sector, which was rather markedly reflected in their financial management results in the second half of 2010.

The size of individual components of the demand for goods and services was affected during the last year by many (partly unrepeatable) influences. Households, general government and non-profit institutions final consumption expenditure increased in the total for 2010 only slightly by 0.4% and during the second half of 2010 they were already gradually decreasing. There was probably a marked influence of the volume of financial sources available to both households and general government. Neither fixed capital formation was supporting the growth last year: it decreased by 4.6%, y-o-y. At the same time, even a sharp development of photovoltaic power engineering or the possibility of fast depreciation of transport vehicles had no marked effect in the total for 2010. What had a decisive influence was the decrease of investment activity, namely both to immovable and movable fixed assets. However, the drop was largely compensated by growth of inventories, so the gross capital formation in total was by 4.2% higher than in 2009. External trade turnover was growing dynamically; both exports and imports of goods and services grew identically by 17.6%, despite unfavourable development of terms of trade, which worsened by 2.2 p.p., y-o-y.

In 2010, gross domestic product at current prices increased by 1.1% to CZK 3 667.6 bn. Implicit deflator of GDP dropped by 1.1%, y-o-y, influenced above all by the terms of trade development.

Total employment in terms of national accounts increased only slightly in Q4 2010 by 0.1% (seasonally adjusted), y-o-y; compared to Q3 2010 it was up by 0.3%. Partial increases were recorded by some industries of market services and also construction, trade and financial intermediation, while in manufacturing industry employment remained almost unchanged both y-o-y and q-o-q.

In the average for the entire year 2010, total employment dropped by 0.8% to 5 185.4 thousand persons, while in the second half-year the number of the employed was not decreasing any more.
Gross domestic product in EU27 adjusted for seasonal effects was, by Eurostat estimate, 1.8% up, y-o-y, of which in Q4 it was up by 2.1%. In Q4 2010, GDP increased also in countries, which are the main trade partners of the CR - Germany (+4.0%), Poland (+3.9%), Slovakia (+3.4%), and Austria (+2.7%).
The preliminary estimate of GDP formation and use for Q1 2011 will be released on 13 May 2011.

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Contact: Jan Heller, phone: (+420) 274 052 865, e-mail: jan.heller@czso.cz

Published: 11.03.2011
The data are valid as of the release date of the publication.