DESPITE the fact that analysts expected more than ten percent GDP growth in the first quarter of this year, according to the Slovak Statistics Office's 'flash estimate', the real growth was only 8.9 percent. However, in the final quarter of 2006 the economy grew by 9.6 percent. The Slovak Spectator asked economic analyst Karol Morvay from the MESA 10 think tank to explain the difference.
The Slovak Spectator (TSS): Slovakia's GDP growth in the first quarter of 2007 was significantly lower than the analysts expected. What are the reasons for this?
Karol Morvay (KM): If some analysts expected higher GDP growth, they were probably influenced by the wave of an excessive optimism that was caused by the results seen in the third and fourth quarters of 2006. Due to the high comparative base from 2006, it is understandable that another year-on-year change (in 2007) will not be so huge. But let's not see this as a problem; 8.9 percent growth is almost unique.
TSS: How to you explain such a large difference between the analysts' estimates and estimate published by the Statistics Office?
KM:The statistics office is unemotional. Despite this I do not consider the difference to be so dramatic. On the other hand, several new large companies whose production launch curve is not certain also contribute to GDP growth which causes a large risk of error.
TSS: To what extent can the published data on GDP growth change after adjustment?
KM:Probably only a little. On the basis of the experience we've had so far with so-called flash estimates of GDP growth, the possible change should amount to tenths of percent.
TSS: What development of GDP growth do you expect in the following quarters of this year?
KM:Similar to the first quarter. There are conditions for exceptionally strong growth for at least two or three quarters and then it could slow down. Our prognosis for the whole of 2007 is eight percent.
TSS: Are there any factors that could have a negative influence on GDP growth in Slovakia in the near future?
KM:The risk factor is that the effects of former mega investments are evaporating and there will be no similar new investments. Apart from that, the elements of non-standard economic politics that are again appearing could also discourage economic activity.
