Slovakias economic growth slows to 3.1% y/y in Q1 flash estimate.

By bne IntelliNews May 16, 2012
Slovakia's annual economic growth slowed down to 3.1% in the first quarter of 2012 from a 3.4% yearly rise in the fourth quarter of 2011, flash estimates of the statistics office showed. On a seasonally-adjusted basis, the gross domestic product (GDP) grew 3.2% y/y in Q1 and rose 0.8% compared to the previous quarter. The volume of the GDP at current prices reached EUR 16.56bn in Q1, up 4.5% from a year ago. The statistics office said it would publish more detailed GDP figures on June 6. IntelliNews comment: The Q1 flash GDP growth estimate surprised the market, as it exceeded analysts' expectations. UniCredit Bank Slovakia analyst Lubomir Korsnak said the market had expected the annual GDP growth to decelerate to about 1.8%. Slovakia's central bank said it saw behind the strong economic growth a recovery in household consumption, as retail sales grew in each of the first three months of the year, following 18 months of declines and stagnation, and consumer confidence also improved gradually. Improved foreign demand might also have spurred economic growth, as industrial output in the car manufacturing industry, which is the main driver of the country's export-driven economy, have jumped 25% y/y in Q1. However, there are persistent risks for the Slovak economy, stemming from the high unemployment rate of nearly 14% that hinders a considerable recovery in domestic demand, and the political deadlock in Greece that endangers further growth in foreign demand. Slovakia's main exports of cars and electronics go to the eurozone, and particularly to Germany. The Slovak finance ministry expects the economy to expand by 2.3% this year and the IMF has projected a 2.4% growth. The European Commission upgraded earlier this week its forecast for Slovakia's 2012 economic growth to 1.8% from previously expected 1.2% and projected that the central European country would post the highest GDP growth within the eurozone this year. Tuesday's Q1 GDP flash estimates for four other Central and Eastern European countries showed that the Czech Republic and Romania were in recession, Hungary is also heading towards recession while Bulgaria's economic growth stagnated at 0.5% from the previous quarter.
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