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Wages rise together with household spending

ECONOMIC growth slowed to 8.7 percent during the first quarter of 2008 compared with the previous year. Analysts consider it a rapid rate, even in comparison with the 14.3 percent from the final quarter of 2007.

ECONOMIC growth slowed to 8.7 percent during the first quarter of 2008 compared with the previous year. Analysts consider it a rapid rate, even in comparison with the 14.3 percent from the final quarter of 2007.

“Such a rate of growth cannot be considered anything but a slight slowdown of almost record activity,” Vladimír Vaňo, senior analyst with Volksbank, told the Hospodárske Noviny financial daily.

Statisticians and analysts were particularly surprised by the significant increase in household consumption, which accelerated by 2.5 percentage points compared with the final quarter of 2007, ending at 8.4 percent.

Household expenditures increased largely due to higher employment and real wages. Domestic demand exceeded foreign demand and it is predicted that it will be propelling economic growth throughout the entire year. This might push up inflation.

The Statistics Office predicts the annual increase in prices at 4.4 percent.

Compared with significant domestic demand, exports were a bit disappointing, rising 12.2 percent year-on-year.

Slovaks have seen their wallets growing along with the economy. The average monthly wage increased by 10.4 percent year-on-year to Sk20,443 and the real wage went up by 6.2 percent. State administration employees and soldiers are enjoying the highest increase, earning 18 percent more than in the first quarter of 2007.

The number of unemployed continued falling in the first quarter of 2008. Statistics Office data shows the unemployment rate fell 7.4 percent year-on-year to 280,500 in the January-March period. This pushed the average unemployment rate down in the first quarter of 2008 by 1 percentage point, to 10.5 percent.

The long-term unemployed reported the largest drop. The number of those unemployed for more than a year fell by 23,000 to 196,600. Nevertheless, they remain the largest portion of job seekers, at 70.1 percent.

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