A slight correction is expected in Czech GDP from the high pace seen in the first half of the year, despite solid growth in industry. On the production side, the growth of in 'taxes on products' is expected to slow slightly, while on the consumption side it is believed that the inventory build, which drove growth in the first two quarters of the year, will come to a halt.
"We stick to our view that the effects of the mechanisms of tobacco taxation led to an overestimation of GDP in the first half of the year and will lead to an underestimation of growth in the second half of the year", says Societe Generale.
GDP is expected 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.