THOUGH Slovakia has avoided the fate of some of its neighbours, whose economies are slumbering in recession, in the last quarter of 2012 various factors put the brakes on Slovakia’s economic growth, which grew by only 0.7 percent year-on-year, while in the third quarter its performance still stood at 2.1 percent, according to the flash estimate of Slovakia’s statistics authority. The gloomy figure did not come as a surprise since frailer development in industrial production at the end of the year, including a drop in car production, suggested that Slovakia’s gross domestic product would also grow at a slower pace, analysts said.
Seasonally adjusted year-on-year growth reached 1.2 percent. Yet the economy still maintained quarter-on-quarter growth at 0.2 percent after seasonal adjustments, the Slovak Statistics Office said on February 14. The statistics authority will offer detailed GDP data on March 6.
Finance Minister Peter Kažimír nevertheless said that given all the circumstances, he still considers the numbers a positive surprise.
“The year-on-year growth in GDP is still in positive numbers,” Kažimír said, as quoted by the SITA newswire. “In any case, this development is in line with our expectations and even slightly better.”
Though market analysts did expect the economy to slow in the last quarter, they had predicted a more moderate slowdown to 1.6 percent, according to a regular survey carried out by the National Bank of Slovakia in January, SITA reported.
The cooling of Slovakia’s trading partners, mainly in Germany at the end of the year, did not benefit the economy, said analyst with ČSOB bank Marek Gábriš.
“The slowdown could be expected also based on the monthly statistics on the development of the economy,” said Boris Fojtík, analyst with the Tatra Banka. “The strongest engine, industry, in the last month of the year even recorded a year-on-year drop.”
According to Fojtík, the economy was probably slowed down even further by lower domestic demand, which has been ailing over the long term, since retail revenues were dropping even faster in the last quarter.
Chief economist with UniCredit Bank Ľubomír Koršňák believes that the year-on-year GDP growth was dragged down by exports, as foreign trade results from the end of the year suggest, showing a surplus in the trade balance of 5.1 percent of the GDP, according to preliminary results.
Even though Slovakia’s economy “despite the drop of neighbouring countries and the so-far resistant German economy surprisingly maintaining its growth, the labour market shows less optimistic results,” suggested Andrej Arady, macro-economist with VÚB Banka, adding that compared to the third quarter of 2012, employment in the fourth quarter dropped by 0.4 percent, while year-on-year the drop stood at 0.5 percent.
The brakes
Yet, Slovakia’s economy in the fourth quarter of 2012 performed better both in year-on-year and quarter-on-quarter comparisons than the average for the whole European Union as well as the eurozone. The GDP of the eurozone in the final quarter of 2012 dropped by 0.6 percent, and that of the whole EU by 0.5 percent compared to the third quarter, SITA reported.
“The economies of the European Union in the fourth quarter slowed more than expected,” said Martin Baláž, an analyst with Slovenská Sporiteľňa, adding that the German economy dropped by 0.6 percent quarter-on-quarter and the French slowed by 0.3 percent during the same period. “The economic development of our neighbours remains negative.”
