23.9.2013

Czech Economy in 2013 Q3

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GDP: There and back again …

-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9

%, y/y

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… into recovery ?

-4,0 -3,5 -3,0 -2,5 -2,0 -1,5 -1,0 -0,5 0,0 0,5 1,0 1,5 2,0 2,5 3,0

%, q/q, s.a.

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… before re-conquering the peak

575 600 625 650 675 700 725 750 775 800 825 850 875 900 925 950

CZKbn, f.p. 2005, SA

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Czech catching-up …

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… in the European perspective

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Industrial output and confidence

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

20 output, 3M MA, y/y, %, confidence, 3M MA

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Construction seized by pessimism

-65

-55

-45

-35

-25

-15

-5

5

-30

-20

-10

0

10

20

30 output, 3M MA, y/y, % confidence, 3M MA

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Retail sales: real wages, taxes, jobs

-5

0

5

10

15

20

25

30

35

-10

-5

0

5

10

15 sales, 3M MA, y/y, % confidence, 3M MA

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Unemployment: amidst the desert

1 2 3 4 5 6 7 8 9

10 11 12 13 14 15 16 17 18 19 20

RU/JV, 3M MA

HUR, 3M MA

Euroarea, HMN, 3M MA

%, persons

Long-term unemployment rate (2012)

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Youth unemployment (age 15-24, 2012)

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Regional unemployment (July 2013)

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Growing openness of the economy

Record trade surpluses

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-175 -150 -125 -100 -75 -50 -25 0 25 50 75 100 125 150 175 200 225 250 275 300 325 350 375

0

50

100

150

200

250

300

Export, 12M MA

Import, 12M MA

TRADE BALANCE, 12M

CZK bn CZK bn

TRADE BALANCE, 12M

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Both export and import dropping y/y (?)

-30

-20

-10

0

10

20

30

40

Export Import

y/y growth, %, c.p.

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Key Czech trading partners (2012)

EXPORT

IMPORT

External balance – current account

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Consumer inflation: below target …

-2

-1

0

1

2

3

4

5

6

7

8 %, y/y

CNB inflation target Headline inflation

Predictions: Headline inflation - Financial markets´ inflation expectations Monetary policy inflation

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… but still elevated fuel prices

15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Gas Diesel

CZK/l

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European perspective

77

0 10 20 30 40 50 60 70 80 90

100 110 120 130 140 150 160 170 Price level index (2012), EU27=100

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Convergence process 1995-2012

Prices

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General government debt

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Long-term sovereign bond yields

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Crown used to be strengthening …

10

15

20

25

30

35

40

45

CZK/EUR

CZK/USD

monthly average, CZK/LCY

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… also in real terms

-12 -8 -4 0 4 8

12 16 20 24 28 32 36 40 44 48 52 56

Index growth against Jan 1996 Index growth, y/y Trendline

Index, %

Real appreciation of koruna

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Key macroeconomic indicators

23.9.2013

Thank you for your attention.

Martin Kupka Investment Research

mkupka@csob.cz

www.csob.cz

This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. CSOB 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 CSOB believes to be reliable, CSOB does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a CSOB judgment as of the data of the report and are subject to change without notice.