Czech's Q3 GDP likely to contract

Czech Republic's GDP saw a high pace in H1 2015, even when it had solid growth in the industry sector. In the second half of this year, a small correction can be likely. Growth in production side might be a little slow, while the inventory build, that has led the consumption side growth in H1, might be stopped.

The effects of the tobacco taxation mechanisms likely caused an high expectation of GDP in H1 2015, which might cause an underestimation of growwth in H2.

"Thus, we expect GDP to contract 0.1% qoq in the third quarter, translating into a slowdown of the yoy dynamics from 4.6% yoy in the second quarter to 4.0% in the third quarter. The GVA measure, which is not affected by changes in taxation, should increase by 0.7% qoq and 3.8% yoy in Q3", says Societe Generale in a research note.