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Economic Briefs

Slovak Rail wants talks with unions to avert strike
Economists expect 3.4 to 4.7% annual growth until 2004
Slovakia reports 2.2 billion Sk trade gap for January
Capacity of Slovak breweries used at 65% in 1999
1999 deficit of public finances below 3% of GDP
Mikloš: stronger crown will not threaten exports

Slovak Rail wants talks with unions to avert strike

The management of Slovak Rail (ŽSR) wants to continue negotiations with representatives of the strike committee of railway worker trade unions even though unionists' demand for an 10% wage increase remains unacceptable. ŽSR spokesman Miroslav Čikovský refused to specify the wage offer from management, while trade unions indicated that even a 5% increase would be not enough.
At the last round of talks on February 21, the ŽSR management offered a 2.4% increase and another potential raise before summer. The trade unions refused the offer and began collecting signatures of ŽSR employees in support of the industrial action in order to be able to legally start a strike.
Employees of a company can go on a legal strike in Slovakia only when over 50% of the company's labour force votes in favor of a strike. While the railway unions continue collecting signatures, the original strike date of March 1 has been pushed back indefinitely. Imrich Sedláček, vice-chairman of the strike committee, said that the strike could be postponed to a later date to avoid causing headaches to school children and their parents enjoying spring holidays.
Projected daily losses resulting from a rail strike are 59 million crowns, 41 million crowns of which would be account for by losses in cargo transport, and the remainder, 18 million crowns, from losses from passenger transport.
Slovak Rail, which currently employs almost 50,000 workers, is expected to cut 18,000 jobs by 2005. From this, 4,700 workers are expected to be be let go this year.


Economists expect 3.4 to 4.7% annual growth until 2004

The Prognostics Institute of the Slovak Academy of Sciences last week released a report projecting average GDP growth in Slovakia between 1999 and 2004 at 3.7 to 4.7% annually. For 1999 and 2000, the annual growth rate was expected to be at 1.9 to 2.9%, respectively, and between 2001 and 2004, the economy was anticipated to rise at pace of 3.4 to 4.7%.
Household consumption from 2001 to 2004 is anticipated to grow 3.1 to 3.9% annually (in real prices), while public sector consumption should go up 0.1 to 0.4% annually. Export of products and services are expected to increase 6.2 to 7.5% annually, while the growth should be 3.8 to 4.5% for imports.
The average unemployment rate between 1999 and 2004 should drop eventually to between 12.4 and 13.4%. According to the institute's scenario, the deficit of current account of balance of payments between 1999 and 2004 should rise from 37.2 billion crowns to 39.8 billion crowns (around 3% of GDP).


Slovakia reports 2.2 billion Sk trade gap for January

Slovakia's trade deficit for January 2000 was 2.2 billion crowns, following a gap of 7.6 billion crowns in December 1999. Compared with January 1999, the trade deficit this year was 0.7 billion crowns lower.
In January 2000, Slovakia's exports were 34.4 billion crowns ($0.8 billion), up 29% when compared with January 1999. Imports in January were 36.7 billion crowns, up 23.9% on the year before, the Slovak Statistics Office reported on February 25.
In 1999, Slovakia's trade deficit totaled 45.7 billion crowns ($1.06 billion), having narrowed by 37.2 billion crowns compared with 1998. Slovakia's 1999 imports amounted to 468 billion crowns, up 1.6% compared to the previous year, while exports, totaling 422.3 billion crowns, increased 11.8%.


Capacity of Slovak breweries used at 65% in 1999

The current total annual capacity of Slovak breweries is 6.71 million hectoliters, however total beer production in 1999 was only 4.4 million hectoliters, meaning the capacity of breweries in Slovakia was only used at 65%. Information provided by the Slovak Antitrust Bureau stated that most domestic beermakers cannot fully use their capacity. Only Topvar (98.1%) and Corgoň (84.9%) approached 100% usage of capacity.
In 1999, Slovakia imported approximately 361,900 hectoliters of beer, most of it from the Czech Republic, while Slovakia's beer exports accounted for 114,200 hectoliters.


1999 deficit of public finances below 3% of GDP

The National Bank of Slovakia (NBS) estimated last week that the deficit of public finances fell to below 3% of GDP in 1999, and that the deficit on the current account of the balance of payments would end up at 5.6% of GDP for last year. "According to our prognoses, the deficit of public finances was 2.4% of GDP at the end of 1999. If we also include in our calculations the proceeds from the sale of the NBS's stake in the ČSOB, it should be even lower than 1% of GDP," said Elena Kohútíková, director of the NBS Monetary Policy Department at a meeting of the Slovak-Austrian Chamber of Commerce on February 24.
The central bank's predictions for 2000 include a public finances deficit of 3% of GDP, a figure which does not incorporate costs for restructuring the banking sector. The NBS calculations indicate that the deficit should remain at a similar level in 2001 and fall to a projected 2.4% in year after that.


Mikloš: stronger crown will not threaten exports

The strengthening of the Slovak crown should not threaten the competitiveness and export productivity of the Slovak economy, said Deputy Prime Minister for Economy Ivan Mikloš on March 1.
"If the crown exchange rate is to be sustainable, its appreciation cannot be faster than the growth of competitiveness of the economy," Mikloš said. If the rate of the crown appreciation is higher than the growth in competitiveness, it would result in a deepening foreign-trade deficit and the exchange rate would not be sustainable, he explained.
According to preliminary figures, Slovakia managed to cut its deficit on the current account balance from over 10% the previous years to below 6%, largely because of an almost 12% increase in exports. The weakened Slovak crown was a significant factor behind the export jump, falling from about 36 crowns to the dollar in January 1999 to about 43 by year end.


Compiled by Keith Miller from SITA

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