BRATISLAVA, June 16, (WEBNOVINY) — Conditions for financial stability improved in Slovakia last year, particularly as a result of economic recovery, which reflected in relatively strong GDP growth, the National Bank of Slovakia (NBS) reported. Following the crisis year of 2009, profit in the banking sector improved a great deal in annual terms. Chiefly retail banking revenues bolstered the positive outcome. In its financial stability report, the central bank also points out potential external risks in the coming period. The threat of sovereign and credit risk escalation in the so-called euro area peripheral states seems to be the most serious danger in terms of negative impacts. The reason is the direct impact on balance sheets of a bulk of banks in the euro zone, the central bank says.
The National Bank of Slovakia expects that the Slovak economy will capitalize on ongoing growth of foreign demand, fixed investments, and a gradual recovery of the private consumption in 2011-2012. The authority predicts that a relatively healthy macroeconomic development will most likely enhance the local financial stability. However, the situation in the near future will be shaped by fiscal consolidation. Depending on its scale and timing, the consolidation will mean a negative demand shock for development of disposable income of households and, potentially, for the jobless rate and costs of companies.
Credit risk of non-financial companies remains dominant, with a difficult situation in sectors focused on local economy. Non-financial corporations, particularly in the export-oriented sectors, and households saw a slight improvement last year. A more significant improvement among households would need a U-turn on the labor market.
SITA
