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Foreign trade results bring unpleasant surprise

SLOVAKIA'S foreign trade results for January 2006 were an unpleasant surprise for the market, as the country posted one of its worst-ever trade deficits - Sk11.2 billion (€298 million), up Sk9.4 billion year-on-year.

According to Ľudová banka analyst Mário Blaščák, the poor January results were due to high energy prices, and to Slovakia's small and open economy, which hasn't diversified to alternative energy power sources.

Blaščák also saw a risk in the high concentration on a few sectors, such as the auto industry.

But according to Slovenská sporiteľňa analyst Mária Fehérová, the January results are nothing to worry about, as Slovakia's foreign trade balance will start to improve in the second quarter of this year.

"Exports are going well, and will be strengthened when car industry production begins [at the new Peugeot and Hyundai/Kia plants]. Meanwhile, imports are expected to fall when all the technology needed by foreign investors for their new plants has been transported to Slovakia," Fehérová told the TASR news wire.

ČSOB analyst Marek Gábriš also said he believed Slovak exporters were performing well despite the increased trade deficit. Exports are now growing at their fastest rate since April 2004, and have been over 20 percent higher year-on-year for three months in a row.

Blaščák and Fehérová predicted that Slovakia's 2006 trade deficit would be Sk60 billion and Sk47 billion, respectively, compared to over Sk80 billion in 2005, or 5 percent of GDP.

Slovakia's foreign trade deficit for December 2005 was Sk26.3 billion (€700.1 million), up Sk15 billion year-on-year, the Statistics Bureau reported.

Compiled by Beata Balogová from press reports
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