Slovakia's annual economic growth accelerated to 0.9% in the second quarter of 2013 from a 0.6% yearly rise in the previous three months, flash estimates of the statistics office showed. On a seasonally-adjusted basis, the Q2 gross domestic product (GDP) grew by 0.8% y/y and by 0.3% q/q, compared to a seasonally-adjusted 0.8% annual growth and a 0.2% quarterly rise in Q1. The volume of the GDP at current prices reached EUR 18.242bn in Q2, up 2.4% from a year ago. The statistics office said it would publish more detailed GDP figures on September 4.

IntelliNews comment: After reaching the slowest annual growth since the 2009 recession in Q1, the export-driven Slovak economy showed a recovery in Q2 and accelerated also on a quarterly basis. Some major economic indicators, including industrial sales, industrial orders and exports data, showed a surprising recovery in April, but worsened in the following two months. Industrial output has maintained growth momentum this year, but has remained subdued, significantly below its last year levels.

Slovakia’s 2% economic growth last year was fuelled solely by exports, while domestic demand and household consumption shrank. Exports were driven mainly by booming car production as new capacities came on stream. But there are no new capacities planned to be installed this year and the growth in output and sales of the auto manufacturing industry decelerated significantly in Q2, while the industry’s new orders even fell in annual terms in May and June, indicating that the economy is losing steam.

Foreign demand is anticipated to remain soft this year, given the continuing crisis in the eurozone, which is Slovakia’s main trading partner. This, coupled with the government's austerity drive, is likely to dent Slovakia’s economic growth to below 1% this year, while domestic demand and household consumption are seen staying subdued.