SLOVAKIA’S export-propelled economy continues to grow. In the third quarter of 2013 the country’s GDP increased by 0.9 percent on an annual basis, according to the flash estimate of the Slovak Statistics Office released on November 14. In the second quarter of this year, the economy grew by 0.8 percent, the statistics authority said. However, employment continues to shrink, having dropped by 0.9 percent on an annual basis after a 1.3-percent drop in the second quarter of 2013.
“[Based on indicators so far] the growth was influenced traditionally by foreign trade, which arrived on the heels of accelerating growth in industrial production,” Boris Fojtík, an economic analyst with Tatra Banka, wrote in his memo. “The significant slowdown of growth dynamics of retail sales indicates that the contribution of households would not be as positive as what we saw during the previous quarter.”
Martin Baláž of Slovenská Sporiteľňa agrees, pointing to the over 30-percent growth of foreign trade surplus during the second quarter of 2013 year-on-year.
After December 4 the Statistics Office will release more details on the structure of GDP.
With seasonal adjustment, GDP rose 0.7 percent compared to the third quarter of 2012, and by 0.2 percent when compared with the second quarter of 2013. While the growth remained the same on an annual basis, the quarterly comparison indicates a slowdown from 0.3 percent reported for the second quarter of 2013.
According to Ľubomír Koršňák of UniCredit Bank, monthly data for industry, retail sales and foreign trade indicate that the structure of economic growth did not change fundamentally over the third quarter.
“Weak summer retail sales indicated that household consumption did not maintain the surprisingly strong growth from the second quarter,” said Koršňák, adding that probably all components of domestic demand were behind its decline, i.e. consumption of households and the government and investments.
Eva Sadovská, analyst with Poštová Banka, expects stagnation in the area of consumption.
“We see the country’s persistently high jobless rate as a reason behind cautious consumer behaviour,” Sadovská said, as cited by the SITA newswire.
Better than the eurozone average
Slovakia’s economy developed better than average in the eurozone during the third quarter of 2013, based on data of the Eurostat revealed on November 14. Compared to the second quarter of 2013, it rose 0.2 percent, while the eurozone reported an increase of 0.1 percent. The GDP of the whole 28-member European Union grew 0.2 percent. Compared with the third quarter of 2012, Slovakia’s economy grew 0.7 percent, SITA wrote.
Economic growth in Germany, Slovakia’s main trading partner, slowed to 0.3 percent on a quarterly basis from a robust 0.7 percent in the second quarter.
The Czech Republic, another significant partner of Slovakia, saw its economy shrink by 0.5 percent, quarter-on-quarter. It grew 0.6 percent during the second quarter of 2013, after a continuous six-quarter decline.
Employment
Analysts see signs of stabilisation in employment.
“It is possible to look at the development of employment, which has halted its decline which lasted for more than one year, with a moderately positive view,” Fojtík wrote in the memo. “After seasonal influences are taken into consideration, employment did not change compared with the previous quarter. However, on an annual basis the number of employed decreased by 0.9 percent.”
A total of 2.195 million people were employed in the third quarter. In comparison with the same period in 2012, employment decreased by 0.9 percent. Seasonally adjusted total employment was 0.8 percent lower when compared with the third quarter of 2012, and it remained on the same level compared with the second quarter of 2013, the Statistics Office reported.
Outlook
Koršňák of UniCredit Bank expects the year-on-year economic growth to accelerate to 1.2 percent in the final quarter of 2013 thanks to the lower comparison base from the end of 2012 but also the economic revival of Slovakia’s trade partners.
“Also, the domestic economic sentiment, which has improved over the last three months, especially in the segment of expectations, supports the optimism,” said Koršňák.
However, in spite of positive expectations for the last quarter of 2013, UniCredit Bank revised its forecast of Slovakia’s economic growth downward from 1.0 percent to 0.9 percent, as a consequence of the revision of Slovakia’s economic growth in the first half of 2013 and in 2012.
While Tatra Banka’s forecast is the same, at 0.9 percent, Slovenská Sporiteľňa is keeping its forecast at 0.7 percent. Nevertheless, economic growth remains too low to help create new jobs.
“We are afraid that GDP growth will fail to exceed 3 percent and thus the achieved growth would then not be big enough to create new jobs,” said Sadovská, as cited by the TASR newswire.
