Slovakia's economy will expand by 3.7% y/y in 2Q19 and by 3.8% in the full year 2019, according to the May short-term economic forecast, published by the Budgetary Responsibility Council in its forecast from May 20, drawing attention to growth risks, including weaker exports and unfulfilled anticipation of accelerating household consumption.
The council forecast expects GDP to increase by 3.7% y/y also in 3Q19. “The estimate for 2019 is 3.8% y/y, representing a negative 0.2 percentage point of GDP risk against the original forecast at 4% in February 2019 published by the Macroeconomic Forecasting Committee,” said the council.
According to the Slovak Statistics Office, the economy increased by 3.7% y/y in 1Q19. “Car sales and increased tourism revenues managed to offset lower retail revenues to a degree, but the consumption of Slovak households were nonetheless slowing down in comparison to the previous year. In the first quarter, the Slovak households started to shift from consumption towards savings,” said UniCredit Bank Czech Republic and Slovakia's Lubomir Korsnak, as quoted by the Slovak News Agency.
According to the council, GDP growth over the past few quarters has been under expectations due to lower net exports at the end of 2018, adding that it sees the greatest risk for 2Q19 in foreign trade, mainly due to lower exports. “Slowdown in exports was also confirmed by hard data on hours worked, monthly exports of goods and foreign demand from our major trading partners,” the council forecast stated, as quoted by daily Sme.sk.