Foreign trade grew at a surprising pace in November 2017

Lower imports only stressed foreign trade surplus for last November, causing a surprising result, macro-economic analyst opines.

The automotive industry, illustartive stock photoThe automotive industry, illustartive stock photo (Source: Sme)

Slovakia’s foreign trade produced a surplus of €535.5 million in November 2017, the Slovak Statistics Office (ŠÚ) reported on January 9. Total exports amounted to €7.228 billion in that month, which represented an increase of 6.8 percent year-on-year. Imports grew by 3.3 percent to €6.693 billion.

Meanwhile, the first eleven months of 2017 saw foreign trade generate a surplus of €3.266 billion, which was €516.4 million lower than the surplus posted for the same period in 2016. Total exports rose by 7.2 percent y-o-y to €69.363 billion, while total imports went up by 8.5 percent to €66.097 billion, the TASR newswire wrote, citing the ŠÚ data.

The foreign trade surplus of Slovakia is gradually increasing, the SITA newswire wrote.

Analyst explains the November surprise

The lower imports only stressed the foreign trade surplus for November 2017, causing a surprising result, wrote Ľubomír Koršňák, macro-economic analyst of the UniCredit Bank Czech Republic and Slovakia, in reaction to the published data.

A closer look at the structure of foreign trade does not give much to rejoice about, he adds. The surprising November figures are rather the result of weaker imports than of the acceleration of exports. Month-on-month, exports only stagnated in November, (seasonally adjusted, according to UniCredit Bank calculations), while the dynamics of their y-o-y growth has slowed down from 10.7 percent to 6.8 percent under the basic effect, according to the analyst. Thus, the y-o-y- growth of exports in November slightly lagged behind the average of previous months, and suggested that even the figures for industry to appear soon should not offer a big positive surprise and should agree with the original estimate – a mild slow-down of y-o-y growth from 5.4 percent in October to 4.5 percent.

Outlook for 2018

The surprising November figures reversed the long-term trend in foreign trade, Koršňák opines. However, this did not necessarily mean a long-term change of trend but rather a short-term deviation and in the upcoming months, foreign trade figures should return to the original trajectory from previous months, i.e. the gradual reduction of surpluses due to strong domestic demand, pushed by growing household consumption and the import of technologies, especially in the automotive industry. In the course of 2018, together with the ending of massive investments in the automotive industry and the launching of new production capacities, surpluses in foreign trade should gradually stabilise and approximately from mid-2018, start expanding again, the macro-analyst summed up.

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