* Euro zone recovery supports CEE economies in Q4
* Czech, Hungarian GDP growth fastest in years
* Czech +1.6 pct q/q, +0.8 pct y/y in Q4
* Hungary +2.7 pct y/y, Romania +5.2 pct, Poland +2.7 pct
By Jason Hovet
PRAGUE, Feb 14 The Czech economy expanded at its
fastest pace in six years and Hungary's at its fastest in seven
years at the end of 2013 as a pickup in trade with the euro zone
and stronger investments boosted recovery in central Europe.
The EU's emerging eastern economies are regaining momentum
after a slowdown, with data from around the region on Friday
showing economic expansion was more robust than expected in many
countries in the fourth quarter.
Hungary's economy grew by 2.7 percent in annual terms, its
highest growth rate since the end of 2006. Romanian gross
domestic product (GDP) expanded almost twice as fast as expected
at 5.2 percent year-on-year.
The Czech economy posted its first year-on-year rise in two
years and rose 1.6 percent quarter-on-quarter, the fastest since
2007, before the global financial crisis whose effects are still
being felt across Europe.
The Polish economy, the region's biggest and the only one to
avoid recession since the 2008-09 global crisis, grew 2.7
percent year-on-year, up from 1.9 percent in the third quarter.
But the rise was slower than expected and could temper any
expectations that interest rates would need to rise soon, some
Growth figures copied stronger data from the euro zone,
which grew more than expected thanks to stronger expansion in
its biggest countries France and Germany, the latter being
central Europe's most important trade partner.
"The data were strong across the board. The backdrop is
continued recovery in the euro zone, which is the region's major
export market and will continue to determine the prospects for
the region in 2014," Capital Economics' chief emerging markets
economist Neil Shearing said.
"Our sense is that we will see continued growth in the
region of 2 to 3 percent this year, with Poland and Romania at
the front of the pack."
Slovakia's economy expanded a higher than expected 1.5
percent year-on-year while Bulgaria's grew 1.0 percent.
Currencies, under pressure from emerging market worries this
year, gained after the GDP readings.
The faster growth at the end of 2013 could prompt higher
forecasts for this year. Hungary's Economy Minister Mihaly Varga
said on Friday that the economy was on track for 2 percent
growth but could expand more.
Hungary's central bank, though, will likely still cut record
low interest rates again when it meets next week.
"We expect the bank to continue cutting rates despite the
forint's weakness, and low inflation can help explain the move,"
said Gergely Gabler, an analyst at Erste Bank.
The Czech central bank has forecast growth of 2.2 percent
this year in an economy that has lagged the rest of the region,
hit by the euro zone debt crisis hampering export demand while
austerity at home deterred shoppers.
"We saw acceleration already in the third quarter, and even
more in the fourth - a very positive development looking at the
Czech Republic and Poland," said Pavel Bouska, owner of pet food
maker Vafo, which exports into dozens of countries.
"We are preparing to build a new factory for 250 million
crowns ($12 million). Hopefully companies and people have had
enough of the savings and things will get going again."
The country came out of a year-and-a-half in recession only
last year and the boost in growth at the end of 2013 comes after
the central bank intervened massively to weaken the crown
currency to fight deflation risks in November.
The weakness in the crown, which had traded down around 6
percent before rising a half percent on Friday, prompted
shoppers to try to get ahead of expected price rises this year
triggered by higher import prices.
Investments were also up, the Czech statistics office said.
"The Czech economy slammed on the gas pedal in the fourth
quarter," Pavel Sobisek, chief economist for Unicredit in
Prague, said. "Even if the numbers are revised down, the
reported growth is so robust that it cannot change the overall
picture of the economy."