SLOVAKIA’S economy continued growing in the second quarter of 2012, a time when some of the European giants either stagnated or grew at a rate slower than one percent. The country’s economy grew at a rate of 2.7 percent year-on-year, a slight fall from the 3.0-percent growth recorded in the first quarter of 2012. The economy maintains a solid quarter-on-quarter growth at 0.7 percent, the country’s statistics authority reported in its flash estimate on August 14. The volume of GDP at current prices in the second quarter of 2012 reached €17,825 million, a 3.7 percent increase year-on-year, the Slovak Statistics Office said.
Slovakia’s automobile industry is the driver behind the economic growth, market watchers suggest based on available monthly statistics. The Slovak Statistics Office will publish further details on the condition of the economy in September.
“The GDP should have been driven mainly by foreign demand supported mainly by increasing car exports,” said Ľubomír Koršňák of UniCredit Bank.
The growth of the automobile industry by more than 50 percent could hardly have been overlooked, added Eva Sadovská, analyst with Poštová Banka.
“Our car producers were doing well even in times when demand from Europe was not as strong as in the past,” Sadovská said, attributing this development to the fact that since last year China has become one of Slovakia’s key customers along with France and Germany.
On the other hand domestic demand had a negative influence on the GDP growth in the second quarter as well, said Koršňák.
This assumption is proven by retail revenues, which failed to maintain their level from the first quarter and in the second quarter they recorded a drop, Sadovská suggested. Stagnation and caution is also expected in the area of investments and the creation of stocks, she added.
“However we expect certain increases in the spending of public administration,” Sadovská added.
Of the other European countries, which have published their flash estimates, Germany has positively surprised market watchers by posting a growth at 0.3 percent, said Martin Baláž of Slovenská Sporiteľňa.
“In the next quarter we expect a gradual slowdown of the Slovak economy due to the slowing of industrial production, which has so far been the main motor of economic growth,” Baláž said, adding that despite the expected growth the country’s economy could in the second half of 2012 grow at 2 percent.
Yet, Eduard Hagara of ING Commercial Banking said that in the second half of the year, the growth of the economy will mainly depend on the performance of the car manufacturers, which is not without any risk factors.
“So far, however, it seems that despite the continuing drop of registration of new cars in the EU, Slovakia’s carmakers have enough orders to keep the growth of the Slovak economy in positive numbers,” Hagara said.