(Adds crown reaction, two central bankers comments)
By Jana Mlcochova and Jason Hovet
PRAGUE, Jan 14 (Reuters) - Czech industrial output plunged in November as fading euro zone demand tore into the export-reliant economy, adding weight to calls for swift and bold interest rate cuts.
The global crisis has filtered through to Central Europe's previously fast-growing economies in recent months, with the Czech Republic and Poland likely to show only modest 2009 growth and Hungary's contraction now expected to be much deeper than earlier thought. [ID:nLE315552]
Czech industrial output dropped 17.4 percent in November, the largest annual drop since 2001 under current methodology and and since 1993 using an older time series.
That was much worse than forecasts of an 8.9 percent drop as analysts said the struggling car sector weighed.
The Czech crown fell 1.2 percent to the weak side of 27.00 per euro on Wednesday, the weakest level since November 2007, following the figures.
The crown has lost almost 15 percent since from a record high of 22.9 hit in July 2008, though the weakening currency has been of little concern for the central bank at a time of a sharp drop in inflation and a need to boost the export sector.
PESSIMISM REIGNS
Central bank Vice-Governor Miroslav Singer said on Wednesday the data could mean that growth would be weaker than the 0.5 percent forecast under the bank's "pessimistic" scenario for 2009. The bank's central scenario sees growth at 2.9 percent [ID:nPRG001193].
"Maybe the development is diverting (even) from the alternative scenario in a negative direction," Singer said.
Another central bank board member Robert Holman told website patria.cz, the pessimistic forecast was beginning to be fulfilled, although he was not in favour of aggressive rate cuts.
The 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 as inflation falls off sharply in 2009. Czech interest rates reached a historic low of 1.75 percent in 2005.
"We now expect a cut of at least 75 basis points at the next CNB board meeting in February," said Lars Christensen, senior analyst at Danske Bank.
The Czech economy is highly dependent on exports, like regional peers, and has suffered from weak demand in the recession-stricken euro zone. New foreign orders fell 33.8 percent in November.
Growth in 2008 is expected to slip to about 4.5 percent from expansion of around 6 percent in the three preceding years.
Czech growth forecasts have been slashed since the escalating financial crisis first crashed into central Europe in October last year. A growing number of analysts predict the Czech economy could yet follow Hungary into recession.
The key automobile industry has been hardest hit, with the
country's largest exporter, Volkswagen's