Slovakias economic growth slows to 2% y/y in 2012.

By bne IntelliNews March 7, 2013
Slovakia's annual economic growth slowed to 2% in 2012 from 3.2% in 2011, as growth decelerated sharply in the fourth quarter of 2012, to 0.7% y/y from 3.8% y/y in Q4 2011, pressed down by subdued foreign demand, data from the countrys statistics office showed. The volume of the gross domestic product (GDP) at current prices reached EUR 18.212bn in Q4, up 2% from a year ago. Slovakia's output grew by a seasonally-adjusted 0.2% q/q in Q4, down from 0.6% in the previous quarter. In Q4 2012, Slovakias economic growth was again driven mainly by foreign demand, the statistics office said. Exports grew by 7.1% y/y in Q4 2012, slowing from an 11.6% growth in Q3 2012 and from a 7.9% rise in Q4 2011, while imports increased by 4.2% compared to a 5.7% growth in Q3 2012 and to a 2.7% increase in Q4 2011. Domestic demand remained a key concern, as it shrank by 1.9% y/y in Q4 following a 3.3% contraction in the previous quarter and a 0.8% fall in Q4 2011, as all expenditure indicators worsened. Gross capital formation shrank by 5.8% y/y, softening from a 10.2% drop in Q3, but the decline in production of gross fixed capital deepened to 5% from 3.7%. Household consumption, which has been falling since Q4 2009 despite the recovery of the economy, declined further in Q4 by 1.2% y/y following a 0.6% fall in Q3. The consumption of the public administration shrank by 0.3% in Q4. IntelliNews comment: The export-driven Slovak economy slowed down in Q4, but maintained growth momentum. The 2012 GDP growth was driven mainly by a one-off from massive investments in new capacities in the auto manufacturing industry. The lack of capacity expansion plans, as well as waning foreign demand point at a significant slowdown of the Slovak economy this year. The governments austerity drive, aimed at cutting the budget deficit to below EUs 3% ceiling, pose additional pressure on GDP growth. We expect the Slovak economy to record a slight growth of around 1% this year, driven again mainly by external demand, while domestic consumption is not likely to post a noticeable recovery by the end of the year, plagued by high unemployment, falling real wages and negative consumer sentiment. The Slovak Finance Ministry expects the country's economy to grow by 1.2% this year, while the central bank sees the 2013 GDP growth at 1.3%. The European Commission has projected a 1.1% GDP growth for Slovakia in 2013, the European Bank for Reconstruction and Development (EBRD) sees a 1.7% growth and the World Bank expects a 1.6% growth.
y/y change Q1 2012 Q2 2012 Q3 2012 Q4 2012 full-year 2012
GROSS DOMESTIC PRODUCT 2.9% 2.6% 2.1% 0.7% 2.0%
Final consumption, total 0.1% -0.7% -0.5% -1.0% -0.6%
--households -0.1% -0.3% -0.6% -1.2% -0.6%
--non-profit institutions serving households -1.1% -0.9% -0.3% 0.0% -0.6%
--government 0.5% -2.1% -0.4% -0.3% -0.6%
Gross capital formation -4.3% -18.2% -10.2% -5.8% -10.3%
--gross fixed capital formation -3.3% -2.5% -3.7% -5.0% -3.7%
Exports of goods and services 5.0% 10.8% 11.6% 7.1% 8.6%
Imports of goods and services -0.2% 1.6% 5.7% 4.2% 2.8%
Source: Satistical Office of the Slovak Republic
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