Slovak economy better off than thought

THE DARK cloud that passed over this central European country's sunny economic growth, when a statistical mistake last month predicted inflated exports, dissipated slightly after authorities released the revised data.
The trade deficit now stands at Sk23.6 billion (€580.59 million), 2 percent of GDP, which is the best result Slovakia has posted during the past eight years. Compared to 2002, the trade balance has perked up by 75 percent.

THE DARK cloud that passed over this central European country's sunny economic growth, when a statistical mistake last month predicted inflated exports, dissipated slightly after authorities released the revised data.

The trade deficit now stands at Sk23.6 billion (€580.59 million), 2 percent of GDP, which is the best result Slovakia has posted during the past eight years. Compared to 2002, the trade balance has perked up by 75 percent.

Earlier miscalculations resulting from flawed export figures submitted by the country's largest exporter, the carmaker Volkswagen Slovakia, were expected to pump the deficit up from the mistakenly estimated Sk17.5 billion (€430.52 million) to almost Sk30 billion (€738.03 million).

However, the latest data, released by the Slovak Statistics Office on February 24, are not so dramatic and indicate that exports rose by 23.2 percent to Sk803 billion (€19.75 billion) and imports by 10.5 percent to Sk826.6 billion (€20.34 billion).

"The trade figures didn't have to be revised to the extent predicted a month ago," Pavol Ondriška, an analyst with financial consultant Slávia Capitál, told the news wire TASR.

The full-year deficit was moderate and the strong export growth in particular is favourable for the Slovak economy, he added.

Exports of cars and transportation means climbed by 69 percent year-on-year and became the major force behind the swelling export figures.

"The automotive industry dominates. The car is the commodity of the era. One can see how tough the fight for winning each new car plant is and how we fought for PSA Citroen Peugeot and how we now fight for the Hyundai investment," said Laszló Pomothy, state secretary of the Economy Ministry, in an interview with the financial daily Hospodárske noviny.

December's trade gap stood at Sk5.1 billion (€125.47 million) with exports up by 32.1 percent year-on-year and imports higher by 14.4 percent.

"The revised deficit was a very pleasant surprise - the deficit in December 2003 totalled only Sk5.1 billion and the deficit for the whole year was only Sk23.6 billion," said Poštová banka analyst Miroslav Šmál.

"There are several surprises in the trade balance figures pointing to the positive development of the economy, permanently growing export efficacy, and competitiveness of Slovak products on world markets," Šmál told TASR.

In relation to its paramount partners, Slovakia raised exports to Germany by 46 percent, Austria 19.2 percent, Poland 10.4 percent, Hungary 10.1 percent, the Netherlands 9.3 percent, the Czech Republic 4.6 percent, and France by 3.6 percent. However, exports to Italy dropped by 14 percent on the year.

As for major groups, exports to the Organisation for Economic Cooperation and Development countries rose by 23.4 percent and to the Central European Free Trade Agreement countries by 9.8 percent. Slovakia reported the highest trade deficits with Russia (Sk78.8 billion or €1.94 billion), China (Sk15.3 billion or €376 million), the Czech Republic (Sk14.7 billion or €362 million), Japan (Sk12.7 billion or €312 million), and Spain (Sk9.3 billion or €229 million), the news wire SITA reported. The highest surpluses were with Germany (Sk37 billion or €910 million), the United States (Sk26.1 billion or €642 million), Austria (Sk23.5 billion or €578 million), Hungary (Sk10.8 billion or €266 million), Poland (Sk9.2 billion or €226 million), and Italy (Sk9.1 billion or €224 million).

Analysts hope the data calm worries about the country's trade deficit, which is one of the most sensitive economic indicators of the country's juvenile economy. The Slovak crown weakened instantly after doubts arose about the trade data, as auspicious exports had boosted the currency all through 2003.

The Czech Republic experienced similar shakes in 2002 when the official trade deficit at Čk94 billion (roughly €3.16 billion) slipped to Čk39 billion (€1.28 billion), much less than thought. The miscalculations cost the head of the Czech Statistics Office, Marie Bohatá, her credibility and position.

In Slovakia, however, neither the Statistics Office, nor the Customs Directorate feel guilty for the flawed data and blamed complications on the car exporter.

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