PRAGUE, April 14 (Reuters) - Czech industrial output shrank by nearly a quarter in February, accelerating from previous months, as analysts said the number could signal the bottom and strengthen the case for more interest rate cuts.
Industrial production plunged by 23.4 percent year-on-year in February, more than a 19 percent decline forecast by analysts, and an acceleration from a revised 22.8 percent fall in January, the Czech Statistical Bureau said on Tuesday.
The export-reliant Czech economy has suffered from weak demand in the recession-stricken euro zone. New foreign orders sank 23.5 percent, the data showed.
"It is no surprise after foreign trade and especially the decrease in exports. We are closely connected to the euro zone ... so the outlook for Czech industry is still darker and darker," said David Marek, a chief analyst at Patria Finance.
"But one positive point is the car scrapping subsidy in Germany and Slovakia. That could limit a further fall in industrial output in the months to come. This figure could be the last of awful figures in the series."
A separate set of data showed on Tuesday retail sales fell 7.9 percent year-on-year in February, more than double analysts' forecast and after a revised 3.4 percent fall in January.
The global crisis has filtered through to central Europe's once fast growing economies in recent months, with the Czech Republic showing a quarter-on-quarter drop in gross domestic product in the fourth quarter of 2008.
Analyst said the eroding picture illustrated by both sets of data give more ammunition for the Czech central bank to continue slashing interest rates.
"Still, the data released today, both from industry and construction, and also retail sales data, is supportive to expectations that the Czech central bank may cut its interest rates by 25 basis points at its 7 May meeting," Radomir Jac, chief analyst at Generali PPF Asset Management.
The crown marginally weakened to 26.575 to the euro