PRAGUE, Jan 14 (Reuters) - Czech industrial output plunged 17.4 percent year-on-year in November on the back of a struggling car industry and falling demand from the euro zone, adding weight to calls for swift and bold interest rate cuts.
The figure was the largest drop since records started in 2001, and was much worse than analysts' forecasts of an 8.9 percent drop.
The Czech crown
"Although it was quite obvious that industrial output may report a double-digit year-on-year decline for November, following the very weak exports that were reported last week, the actual figure is quite disastrous," said Radomir Jac, chief economist for Generali PPF Asset Management.
"...The message for the central bank is clear: interest rates must go down further and quite radically."
The Czech economy is highly dependent on exports, like its regional peers, and has suffered from falling demand in the recession-stricken euro zone.
Overall new orders fell 30.2 percent year-on-year, and new orders from abroad decreased 33.8 percent.
Czech growth forecasts have been slashed, with some outside agencies saying growth could slip below 2 percent in 2009, down from about 4.5 percent last year. Some analysts have warned the Czech economy could follow Hungary into recession this year.
The Czech central bank has cut its main interest rate by 150 basis points since August to 2.25 percent, and most analysts expect another 50 basis point cut at the next meeting on Feb. 5. (Reporting by Jason Hovet, editing by Mike Peacock)