ALTHOUGH the Slovak economy decelerated in the first quarter of 2008 compared to the last months of 2007, it still experienced the highest GDP growth in the European Union.
The growth was fuelled mainly by more foreign direct investment in the automotive and electro-technical industries.
Following the record growth of 14.3 percent in real prices over the last quarter of 2007, Slovakia's GDP increased 8.7 percent year-on-year over the first three months of this year, according to a flash estimate from the Statistics Office. A GDP of Sk472.5 billion (€15.2 billion) was generated from January to the end of March, the office stated.
Slovak industrial output peaked in February. Year-on-year, production grew 11.5 percent that month, which was three percentage points faster than in January (8.5 percent) and higher than the average growth in the fourth quarter of 2007 (10.8 percent).
Car manufacturing remained strong in February, although the growth decelerated from 37.9 percent in January to 29.5 percent. Among the strongest sectors were machine manufacturing (19.8-percent growth) and rubber and plastic product production (20.4 percent).
ING bank analyst Eduard Hagara told the SITA newswire that export-oriented sectors, notably the automotive industry, metals and machines, continued to drive the February growth in industrial production. He added that prospects remain positive because electronics manufacturing, related to production launches in Samsung and Sony, is to boost output growth throughout the year.
Production slowed in March, reaching a year-on-year growth in industrial output of just 1.8 percent. Market watchers presume that this was likely because Easter occurred in March this year, as opposed to in April in 2007.
According to preliminary estimates from the Association of the Slovak Automotive Industry, 640,000 cars are to be made in Slovakia this year, which is an increase of 12 percent in a year-on-year comparison. Last year, 571,071 cars rolled off the assembly lines of car makers Volkswagen Slovakia, PSA Peugeot Citroen Slovakia and Kia Motors Slovakia. Slovakia still produces the highest number of cars (105.7) per capita in the world.
Strategic investment by Samsung Electronics Slovakia in Galanta, Samsung Electronics LCD Slovakia in Voderady and Sony in Nitra, which are attracting more companies as suppliers, have put the electro-technical industry in an increasingly important role in Slovakia's economy. The new Sony plant in Nitra will produce 3,000,000 television sets annually. And Galanta Samsung has become the largest Samsung manufacturing plant in Europe.
The European Commission predicts that Slovakia's economy will slow moderately over the short term. The report read that, in 2008, the economy is to grow 7 percent compared with 6.2 percent projected for 2009. Formation of gross fixed capital should reach strong growth levels of about 7 percent due to further direct investment by suppliers in the automotive and electro-technical industries, the EC concluded.
2. Jun 2008 at 0:00 | By Marta Ďurianová with SITA press reports