Slovakias economic growth slows to 2.1% y/y in Q3 2012.

By bne IntelliNews December 7, 2012
Slovakia's annual economic growth slowed down to 2.1% in the third quarter of 2012 from a revised 2.6% yearly rise in the previous quarter, data from the country statistics office showed. The volume of the gross domestic product (GDP) at current prices reached EUR 18.879bn in Q3, up 3.7% from a year ago. Slovakia's output grew by a seasonally-adjusted 0.6% q/q in Q3, at the same rate as in the previous quarter. Slovakias economic growth was again spurred mainly by a continued increase in foreign demand, the statistics office said. Exports grew by 11.6% y/y in Q3 2012, speeding from a 10.8% growth in Q2 2012 and from 10.2% rise in Q3 2011, while imports increased by 5.7% after a 1.6% growth in Q2 2012. Domestic demand remained a key concern, as it shrank by 3.3% y/y in Q3 following a 1.6% contraction in the previous quarter, mainly as a result of a 10.2% drop in gross capital formation, of which production of gross fixed capital declined 3.7%. Household consumption, which has been falling since Q4 2009 despite the recovery of the economy, declined further in Q3 by 0.6% y/y following a 0.3% fall in Q2. The consumption of the public administration shrank by 0.4% in Q3. For the first nine months of 2012, Slovakias GDP expanded by a real 2.5%. At current prices it grew by 3.9% to EUR 53.25bn. IntelliNews comment: Slovakias Q3 GDP growth was driven mainly by exports, which are supported by increased car production, which soared 53.2% y/y in the first nine months of 2012. The gross fixed capital formation figures show that businesses investments have shrunk further in Q3. But the key concern of subdued household spending remained as the contraction of household consumption deepened to 0.6% from 0.3% in Q2 and we do not expect it to improve significantly in the short term, as the unemployment rate in Slovakia, currently at close to 14%, remains one of the highest in the EU, while at the same time the real average wage is falling. Slovakias GDP growth is expected to slow down by the end of the year, but, nevertheless, the country will remain among the best performers in the eurozone. The Slovak finance ministry and the central bank expect the economy to expand by 2.5% this year and the International Monetary Fund (IMF) and the European Commission have projected a 2.6% growth. The country's economic growth is seen slowing down next year to about 2% due to an expected reduction in foreign demand and also dented by the government's austerity measures aimed at cutting the budget deficit to fit within EU's 3% ceiling.
y/y change Q1 2012 Q2 2012 Q3 2012 Jan-Sep 2012
GROSS DOMESTIC PRODUCT 2.9% 2.6% 2.1% 2.5%
Final consumption, total 0.1% -0.7% -0.5% -0.4%
--households -0.1% -0.3% -0.6% -0.3%
--non-profit institutions serving households -1.1% -0.9% -0.3% -0.8%
--government 0.5% -2.1% -0.4% -0.7%
Gross capital formation -4.3% -18.2% -10.2% -11.6%
--gross fixed capital formation -3.3% -2.5% -3.7% -3.2%
Exports of goods and services 5.0% 10.8% 11.6% 9.2%
Imports of goods and services -0.2% 1.6% 5.7% 2.4%
Source: Satistical Office of the Slovak Republic
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