Despite positive reactions from analysts to the March 15 release of figures showing a 2.2% growth in Slovak gross domestic product (GDP) in 2000, Finance Ministry officials said they had been slightly disappointed by a failure to meet the 2.5% target they had originally set for the macroeconomic indicator in a late 1999 forecast.
Speaking at a press conference to announce the figures, Finance Minister Brigita Schmögnerová said: "We expected 2.5%. The result was slightly lower, but what was very positive was that in the last quarter of 2000, GDP growth showed a positive trend." She also noted that domestic demand had risen more quickly than expected in the fourth quarter of 2000, a development which her ministry said will also be the driving force for this year's economic growth.
Mária Kačurová, the head of the financial policy department at the Finance Ministry, said that a faster economic revival had been expected. "We believe that the figure is positive, but we thought that corporate sector restructuring [including the implementation of important laws such as a new Bankruptcy Law, and attracting foreign investment - ed. note] would influence GDP growth sooner than it did," she said.
According to analysts, though, the 2000 GDP growth was an accurate reflection of the effect of banking and corporate sector reforms carried out last year, and was generally positive.
"Taking into consideration the state of the Slovak economy and the development of the country, the figure can be viewed positively. It's as good as it can get, and shows an improvement from 1999 when growth was [only] 1.9%," said Pavol Ondriska, analyst with brokerage house Slávia Capital.
The government's own year-end GDP forecasts were revised midway through 2000, as actual totals for growth in the first two quarters of last year, 1.5% and 1.9% respectively, saw the growth prognosis move from 2.5% to 2.1% for the entire 12 months.
"We expected higher figures in the first half of last year, and it looked as if our original forecast wouldn't be fulfilled," Kačurová said. However, the third quarter saw growth jump to 2.5%, and finally 2.9% in the fourth quarter, to bring in the total figure at 2.2%. Growing exports and burgeoning domestic demand were the two factors behind the GDP growth at the end of the last year.
According to Kačurová, exports and domestic demand are expected to fuel GDP growth in 2001 to as much as 3.2%. The central bank has set its forecast between 2.8% and 3.2%, similar to the expectations of most macroeconomic analysts. Schmögnerová said she was confident this target could be met.
According to Ľudovít Ódor, an analyst with ČSOB bank, companies in Slovakia are expected to raise exports on the back of growing demand in main export destinations, including Germany, which has a 26.7% share of total Slovak exports, the Czech Republic (18.3%) and Italy (10.1%).
"As far as a hike in domestic consumption goes, we expect the redemption of [29 billion crowns in state privatisation agency] National Property Fund bonds [to citizens] to have an impact, while real wages will grow for the first time in over two years. Both factors will increase domestic consumption [by giving people more disposable income]," Ódor said.
Although real wages fell 3.1% in 1999 and 4.9% in 2000, this year, Ódor said, the growing profitability of Slovak companies would allow an increase in real wages of between 0.5 and 1.5%.
Although Slovakia slightly improved its GDP growth in comparison with 1999, it remains behind other members of the Visegrad group (Hungary, Poland, Slovakia and the Czech Republic) in terms of economic activity.
Poland reported 4.1% GDP growth for last year, Hungary even more at 5.3%. The Czech Republic, which as The Slovak Spectator went to print was about to announce official figures for 2000, was expected to generate growth of between 2.7% and 3%.
"When we look at Hungary's GDP growth, and take into consideration that the country started with reforms in the mid 1990s, we see a clear logic that says the sooner a country starts reforms, the higher its GDP growth will be," said Ondriska. "Therefore, to catch up with its neighbours, it is important for Slovakia to sell off all its state monopolies and finish banking and corporate sector reforms."
