Slovakia's current account deficit, identified as a key problem facing the economy, widened in November as the trade deficit worsened, the central bank said on February 26.
The deficit for the first 11 months of 1998 widened to 66.25 billion crowns from 63.4 billion between January and October and 56.94 billion in January-November 1997.
The bank said in a statement the main impact on the deficit came from a trade deficit of 72.48 billion crowns, compared with 43.07 billion a year earlier.
"It is as expected because the overall development is running at some 10 percent of GDP in line with the trade deficit," said analyst Ivan Chodák of CA IB Securities.
"It is even more damaged by the services deficit which used to be positive...People are travelling abroad more than foreigners are travelling to Slovakia," he added.
The overall services surplus slumped to just 312 million crowns from 3.34 billion in the first 11 months of 1997.
Prime Minister Mikuláš Dzurinda's government, which took power after a September election, has said it aims to halve the current account deficit as a proportion of gross domestic product, provided the budget deficit can be kept to two percent of GDP.
"I do not think it is wildly unrealistic," said HILFE analyst Ann-Louise Hagger. "There is going to be a reduction in the current account this year.
Hagger, who said the current acount data were in line with expectations, cited the halving of the January trade deficit as "quite positive".
The Slovak Statistical Bureau earlier on February 25 gave details of the trade gap which narrowed to 2.58 billion crowns from 5.51 billion as imports fell and exports rose. The central bank floated the crown in early October. It subsequently fell sharply.
The government has drawn up a comprehensive series of measures designed in part to rein in domestic demand. Chodák says this and the benefits to exporters of a weaker crown should help the current account.
"The negative point is that the surrounding countries that we used to export to are not growing as much," he said. He also expected a narrowing of the current account deficit but said the government would probably not meet its target. "Five percent of GDP is not realistic. It will be slightly higher by the end of the year," he said.
Chodák said the target could be affected by a fall in growth. The government has said GDP will grow by three percent this year but Chodák said this was "quite high".
Analysts did not expect the data to have any impact on the currency, which dealers say rarely reacts to macroeconomic fundamentals.
Author: Nigel Stephenson
