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UPDATE 1-Czech finmin sees 2009 GDP down 4.3 pct-paper

Published 07/22/2009, 02:25 AM
Updated 07/22/2009, 02:32 AM

* Finmin fcast revises 2009, 2010 GDP estimates down

* 2010 state budget may have to be reassessed (Adds details, background)

PRAGUE, July 22 (Reuters) - The Czech economy could contract by nearly twice as much this year than expected earlier and see only marginal growth in 2010, possibly forcing the government to review next year's budget, Finance Minister Eduard Janota said on Wednesday.

A new Finance Ministry forecast due to be released later on Wednesday will show the economy is expected to shrink by 4.3 percent this year versus a 2.3 percent dip seen in the previous forecast from April.

Next year, growth would be 0.3 percent, lower than the previous estimate of 0.8 percent, daily Mlada Fronta Dnes quoted Janota as saying.

Janota told the daily the new estimates will mean the ministry may have to reassess the 2010 budget as the deeper contraction will mean lower revenues for state coffers.

This is likely to result in a widening of the budget deficit which is now seen at 165 billion crown ($9.08 billion).

The export-reliant economy, hammered by weak demand from the recession-stricken euro zone for its mainly industrial goods, contracted by a record 3.4 percent in the first quarter.

Some economists say second-quarter GDP data could be even bleaker, judging by the poor foreign trade and industrial output data.

Czech central bank forecast expects the economy to contract by 2.4 percent this year but Vice Governor Miroslav Singer told Reuters on Tuesday a new outlook due to be released in August is likely to revise that expectation downwards. [ID:nLL514753]

(Reporting by Jana Mlcochova; Editing by Neil Fullick)

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