Foreign trade surplus may drop in the end of year

THE TOTAL export of goods rose in October. It reached a total value of €6.3224 billion, with year-on-year growth of 3.5 percent.

Illustrative stock photoIllustrative stock photo (Source: Jana Liptáková)

The total import of goods also rose, by 4 percent y/y to €5.8629 billion. The trade balance was in surplus, amounting to €459.5 million, down by €10.8 million compared to October 2014.

Over the first 10 months of 2015, compared with the same period last year, the total exports of goods rose by 4 percent to €56.2933 billion and the total imports by 6.6 percent to €53.1162 billion. The foreign trade balance was in surplus, amounting to €3.1771 billion, down by €1.1337 billion y/y, according to the Statistics Office (ŠÚ) data.

The October surplus was higher than analysts originally expected. Moreover, it was the highest compared to the other months of the year. The foreign trade revenues were, however, less positive, said Ľubomír Koršňák, analyst with the UniCredit Bank Czech Republic and Slovakia.

“Compared with the relatively stronger September, we could see the drop in foreign trade revenues, on both sides of the balance,” Koršňák wrote in his memo, adding that the dynamics of both imports and exports have slowed down.

The exports dropped by 0.8 percent compared to September, while the annual dynamics fell from 4.9 percent to 3.5 percent. Despite this development, the October volume of exports was close to the average of the first nine months of the year. The slight drop in exports may also indicate slower industrial growth, according to Koršňák.

“The main reason for a drop in the foreign trade surplus can be found in imports,” he continued.

The imports fell by 2.8 percent month-on-month, while the annual drop was even higher: from 11.4 percent to 4 percent. This may be the result of investment imports and imports of semi-finished products, the analyst said. Another factor may be the increase in oil prices in the global markets or the expected completion of projects financed from the previous programming period.

“The foreign trade surplus usually drops in the end of the year, since the imports are increased by growing Christmas retail revenues; on the other hand the Christmas break in some industries decrease the exports,” Košňák said, “Slovakia may thus see a slight deficit of foreign trade in December.”

He also expects that the foreign trade surpluses at the turn of the years may stabilise at 4.5-5 percent of GDP, as a result of the weaker impact of investments that are carried out in order to draw the money from previous programming period.

“The imports will still be impacted by growing household consumption, but this rise may be fully compensated by growing exports stimulated by cyclic restoration of European economies,” Koršňák said.

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