BRATISLAVA, June 8, (WEBNOVINY) – The Slovak economy grew 3.5 percent y/y in the first quarter of this year, according to revised data of the Slovak Statistics Office, which thus confirm the office’s flash estimate of economic development from mid-May. In the January-March period, gross domestic product worth EUR 15.833 billion was generated, which is an increase of 4.5 percent y/y in current prices. In quarterly terms, the gross domestic product net of seasonal influences went up one percent in Q1.
Behind the increase in overall demand was in particular foreign demand. Exports of products and services swelled 15.8 percent, down 2.5 percentage points from the first quarter. Imports of products and services increased by 11.3 percent. Local demand decreased 0.2 percent in y/y terms owing to a 2.5 percent decline in final consumption of the public administration and a 0.1 percent drop in final consumption of households. On the other hand, formation of gross capital rose 2.2 percent, while formation of gross fixed capital went up 1.2 percent. Final consumption of non-profit organizations providing services to households strengthened 2 percent.
The GDP structure shows that the economy still has been driven mainly by export-oriented industry, ING Bank analyst Eduard Hagara opines. According to him, demand is coming mainly from Germany, which is our most important foreign partner, and has been posting significant economic growth. On the other hand, local demand keeps lagging behind. Behind the decrease in government spending is the Cabinet’s austerity package, while the growth rate of investments further decelerated, too. “A more considerable growth of investment activities in the previous months probably reflected catching up with neglected investments into renewal of technologies rather than influx of new investments,” Hagara opines.
At the same time, economic growth did not create enough new jobs, whereas wages after deducting the price growth decreased in the first quarter, which results in weak consumer confidence. According to Hagara, consumption of households may start rising again in the second half of the year. “We expect the gross domestic product to grow 3.4 percent this year,” Hagara stated.
Added value constituted EUR 14.253 billion of the GDP in Q1, up 2.6 percent y/y. Within the generated added value, industry’s share represented 29.6 percent. Compared with the first quarter of 2010, the contribution of industrial manufacturing rose 2.7 percentage points, while the biggest drop of 0.4 points was reported in transport and storage; and accommodation and food services.
Bank analysts originally expected a further modest slowdown in annual growth of the economy. A survey by the National Bank of Slovakia assumed annual economic growth of 3.3 percent for the first three months of this year. For the whole of this year, bankers predict for Slovakia economic growth of 3.6 percent on average. The Slovak economy this year should be driven in particular by exports and investment activity.
SITA