Slovakia’s GDP in the first quarter of 2009 was 11.4 percent lower than in the preceding quarter, according to revised estimates published on Wednesday by the European statistics office Eurostat. This figure means that the Slovak economy’s contraction was the greatest among all members of the European Union (EU) during the period.
Bank analysts say that the cause of the decrease is the recession in euro area economies that is depressing foreign demand. The fall of Germany’s economy has had the most significant impact on the Slovak economy, as Germany is Slovakia’s main trading partner. “That's why the economy will probably lose most of the 6.4-percent real growth in GDP recorded during 2008,” Slovenská Sporiteľňa bank’s team of analysts told the TASR newswire.
“A more detailed structure of the real drop in GDP definitively confirms that in the case of small and open economies it’s not possible to [separate] foreign and domestic demand from each other,” Volksbank Research main analyst Vladimir Vano told TASR. He recalled that besides weaker demand, Slovakia was hit by the gas crisis in January, which forced most of the largest Slovak industrial firms to suspend production. Analysts concur in their expectation that Slovakia's economy will contract this year.
"According to Saxo Bank analysts, Slovakia will face a slump in GDP of 5-5.5 percent this year," Saxo Bank specialist Radko Duda said. Slovenská Sporiteľňa estimates the drop to be 5-6 percent. The first signs of revival are expected to appear next year. "The gradual recovery of the German economy in the second half of 2010, as well as the low comparison basis should help [to bring about] slightly positive growth in Slovakia's economy in 2010," the Slovenská Sporiteľňa team of analysts stated. In Duda's opinion, a real revival in the global economy should occur no earlier than in 18 months, although the first signs of growth are now slowly appearing.
Compiled by Zuzana Vilikovská from press reports
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