Czech GDP seen at 2.3% this year and 2.7% next

Czech January retail sales (including the automotive sector) increased by a solid 6.4 % yoy thus significantly beating the market's estimates. 

Car sales contributed significantly, up 8.7% yoy (12.1% WDA), confirming its position as the dominant driver of the Czech economy. 

There was a sharp increase in sales adjusted for cars, which grew 5.5% yoy (6.6% WDA) pointing to a strengthening of domestic demand. 

Societe Generale notes its observations as follows:

• Czech January retail sales, trade balance, construction output as well as industrial production revealed better results than expected. 
  
  
• Retail sales growth should continue apace this year, when we expect expansion of 4.9%. 
  
  
• Moreover, trends will mainly be driven by sales adjusted for the automotive sector. 
  
  
• Household consumption should therefore also accelerate and increase by 2.3%.
  
  
• The domestic economy continues to benefit from the effects of the weaker crown stemming from the FX floor policy, easy fiscal policy, historically low interest rates, and the recovery in foreign markets.
  
  
• This should result in GDP growth of 2.3 % this year and 2.7% next.