Analysts were surprised by Slovakia's unexpectedly strong GDP growth in permanent prices in the third quarter, which was up by 4.6% y/y -- the fastest growth since the end of 2015, according to the data published by the Slovak Statistics Office on November 14.
According to UniCredit Bank analyst Lubomir Korsnak: “Economic growth came as a positive surprise,” as unlike most Eurozone countries, its growth dynamics has not slowed significantly. Household consumption has been a main engine.
When seasonal adjustment is taken into account, GDP growth reached 4.5% y/y and 1.1% q/q. As for current prices, GDP reached €23,796.6mn, increased by 7% y/y in the 3Q18. According to Korsnak for the Slovak News Agency (TASR), a revision of previous quarters partly helped to boost y/y growth in terms of statistics.
“We don't know the structure of 3Q18 GDP growth yet. However, monthly released figures on industry, foreign trade, construction and retail should already indicate something to us. It seems that the Slovak economy in the third quarter probably benefited from the ongoing rejuvenation of the automotive industry, which accelerated its output growth to two-digit figures. However, industry as a whole produced much more inconsistent results, leaving the automotive industry alone in its growth,” Korsnak explained.
A detailed structure of updated GDP will be released by Statistics Office in December. "We expect growth to be fuelled by domestic demand, chiefly household consumption and investments. Strong household consumption is being fuelled by favourable developments on the labour market, in particular a drop in the unemployment rate and growth in employment and salaries, which helps to increase disposable household incomes," stated Slovenska sporitelna analyst Katarina Muchova for TASR.