Economic good mood expands to three-year high

THE STATISTICAL Office (ŠÚ) every month compiles an Index of Economic Sentiment (IES), a complex indicator of confidence in the economy derived from outlook surveys in industry, construction and retail, as well as consumer opinion polls. The Office said the IES rose four points last month to 102.4, with 1995 sentiment representing the base value of 100.
The new high came on the back of strong optimism in industry regarding production rises and demand for industrial products.
More than 85 per cent of industrial firms have said demand is at seasonal averages, while more than half predict industrial production in the second quarter of the year to grow.

THE STATISTICAL Office (ŠÚ) every month compiles an Index of Economic Sentiment (IES), a complex indicator of confidence in the economy derived from outlook surveys in industry, construction and retail, as well as consumer opinion polls. The Office said the IES rose four points last month to 102.4, with 1995 sentiment representing the base value of 100.

The new high came on the back of strong optimism in industry regarding production rises and demand for industrial products.

More than 85 per cent of industrial firms have said demand is at seasonal averages, while more than half predict industrial production in the second quarter of the year to grow.

Confidence in the construction sector, often seen as a key indicator for the rest of the economy, was higher than in February, the study showed. The vast majority of those in the industry said they expected demand in March 2002 to be at seasonal averages, while a third said they expected growth in the number of employees in the sector.

The sector has struggled in the last three years, partly as a result of the cancellation of massive highway construction projects started under the last government.

The findings of the SÚ study were welcomed by the Economy Ministry. Peter Chalmovsky, spokesman for the ministry, said the survey confirmed a growing confidence in the economy.

"There is a general optimism in the economy. GDP grew last year, real wages rose and macro economic results, with the exception of the unemployment rate and the balance of trade, were very good.

"The prognoses for the trade balance next year are also much better, and the ministry is very positive about the development of the economy," he said.

GDP in 2001 grew at 3.3 per cent, while real wages also grew 0.8 per cent. However, unemployment in the country in February stood at 20.7 per cent, and the trade deficit, which last year reached a record high of Sk105 billion, continues to grow.

Trade union leaders have been critical of the high unemployment rates, and claim that real wages have actually dropped seven per cent over the last three years.

Following a meeting between government, trade union and employers' representatives just a day before the SÚ released the findings of its survey, Deputy Prime Minister for the Economy Ivan Mikloš said he was confident the coming year would see real wages grow further and the economic situation for many households improve markedly.

Economists were also confident that the economy was showing signs of basic improvement.

"The three-year high [reported in the study] suggests optimism about the future, and frankly I see the same. The underlying economic fundamentals are good, with only the trade deficit looking bad.

"The general trend with these fundamentals won't change, except for the trade deficit, which the government will have to take action on," said Tomáš Kmeť, an economist at Slovenská sporiteľňa.

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