The performance of the Slovak economy rose by 3.7 percent year-on-year in the second quarter of 2016 which represented a y/y acceleration of 0.3 percentage points, the TASR newswire reported on the flash estimate published by the Statistical Office (ŠÚ) on Tuesday, September 6.
When it comes to a quarter-on-quarter comparison, Slovakia’s gross domestic product GDP grew by 0.9 percent in the 2Q16 when seasonal effects are taken into account. ŠÚ added that at current prices, gross domestic product (GDP) jumped y/y by 3.2 percent to €20.053 billion.
In comparison with previous quarters, the structure of growth substantially changed also thanks to net export, according to UniCredit Bank Czech Republic and Slovakia analyst Ľubomír Koršňák. While in the first quarter of 2016 exports and imports y/y more or less stagnated, in the 2Q16 they showed relatively dynamic growth, 7.7 percent and 5.9 percent, respectively.
“Net export benefited mainly from the booming demand for new cars in Europe which also helped Slovak automotive companies to move production to new historical peaks,” wrote Koršňák in the response to ŠÚ’s estimate.
The end consumption expenditures of public administration rose by 2.2 percent y/y, while those of households went up by 3 percent and those of non-profit institutions serving households increased by 3 percent. End consumption of Slovak households showed the fastest growth since the end of 2008, Koršňák said.
“Positive development in the labour market, increasing employment and wages, finally appears in the consumption of Slovak households,” Koršňák said.
Employment also has better results
Employment in Slovakia, based on the ŠÚ’s selective survey, rose by 3.1 percent y/y in the second quarter which means acceleration compared to the first quarter of 2016 (2.9 percent y/y). Employment grew particularly in the service sector and industry but fell for the fifth time in agriculture, Slovenská sporiteľňa bank analyst Katarína Muchová informed in the short report.
The unemployment rate fell to 9.6 percent down by 0.8 percentage points q/q and by 1.6 percent y/y, Muchová added.
Growth will continue
In the next months, the Slovak economy should benefit again from a relatively robust recovery of external demand but also domestic consumption supported by growth in employment, wages, low interest rates and still absent inflation, Koršňák opined.
Muchová expects a possible influence from Brexit on the economic sentiment and growth of the Euro area in the second half-year.
“However, such influence should be limited as the exact date of the UK’s departure from the EU has not been set yet,” Muchová said.