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Statistics Office confirms 2.5 percent growth in Q2

SLOVAKIA’S economy grew by 2.5 percent in the second quarter of 2014, which is by 1.7 percentage points better compared to last year. In quarter-on-quarter comparison the GDP grew by 0.6 percent, according to the detailed information about the economic growth published by the Statistics Office (ŠÚ) on September 3.

SLOVAKIA’S economy grew by 2.5 percent in the second quarter of 2014, which is by 1.7 percentage points better compared to last year. In quarter-on-quarter comparison the GDP grew by 0.6 percent, according to the detailed information about the economic growth published by the Statistics Office (ŠÚ) on September 3.

Though the crisis in Ukraine has not affected Slovakia’s economic growth yet, market watchers warn that the impact can be visible in the second half of the year.

In common prices the GDP volume grew by 1.9 percent y/y to €18.381 billion. The increase was supported mostly by the domestic demand that rose by 5.8 percent y/y. The final consumption expenditures grew by 3.3 percent y/y in total, of which final consumption of public administration by 5.3 percent, final consumption of households by 2.7 percent, and final consumption of non-profit associations for households by 2.4 percent. The total gross capital formation went up by 16.9 percent, of which gross fixed capital formation by 6.2 percent, the ŠÚ reported.

Regarding the external demand, the growth dynamics of exports of goods and services slowed down by 1 percentage points y/y to 3.4 percent. On the other hand, the growth rate of imports of goods and services went up by 3.6 percentage points y/y to 5.5 percent, according to the ŠÚ.

František Bernadič, head of the ŠÚ macroeconomics section, said that though the situation in Ukraine can influence the economy of Slovakia, similarly to other countries of the European Union, the prospects for economic growth in these countries remain untouched so far.

“Just like in Germany and in surrounding countries, everyone here understands very well what the potential risks emerging from developments in Ukraine are, but prognoses indicating growth remain the same,” Bernadič said, as quoted by the TASR newswire.

He went on to admit that Germany, for example, has recorded certain falls with respect to the performance of its economy. Germany’s GDP contracted 0.2 percent q/q in 2Q 2014. In spite of this, Deutsche Bank’s prognosis for this year remains unchanged at 1.8 percent growth.

As for Slovakia, the Informatics and Statistics Institute (Infostat) predicts that Slovakia’s economy will grow by 2.4 percent this year. This latest prognosis however does not take into account the potential risks of sanctions and the consequences of the developments in Ukraine, TASR wrote.

Market watchers however warn that the Slovak economy will not rise at the same tempo as in the first half of the year. The VÚB bank, for example, has already informed it may downgrade the expected rise for this year from 2.8 percent to 2.5 percent.

“The worsened situation in external environment indicates that in the second half of the year our expectations of the real growth, which counted with gradual increase in the dynamics above 3 percent, will not be fulfilled,” said Andrej Arady, analyst with VÚB, as quoted by the SITA newswire.

Also Mária Valachyová of Slovenská Sporiteľňa said the economy will slow down, adding that the economic growth will be positively affected mostly by domestic demand.

Meanwhile, also Finance Minister Peter Kažimír admitted that Slovakia will most likely have to revise its economic growth projection for 2015, which is currently at 3 percent of GDP, due to EU’s sanctions against Russia, as reported by TASR.

Source: ŠÚ website, TASR, SITA

Compiled by Radka Minarechová from press reports

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