GDP growth reached 7.1% in line with expectations
- Today, the Slovak Statistical Office released a flash GDP estimate for the 3Q08. The annual economic growth reached 7.1%, meeting the market and our expectations. After seasonal adjustment the growth stood at 7.6%. The final figure will be released on December 4; however, the second estimate usually differs only marginally from the preliminary one.
- The growth structure will be released along with the final figure at the beginning of December; we expect that both domestic and foreign demand contributed positively to the growth. As compared to the previous quarter, when GDP growth reached 7.6%, we expect smaller contribution from the stock buildings.
- Labor market continued to evolve very favorably when the employment increased by 3.1 % y/y (in domestic concept). After strong employment gains during last year and the first half of 2008, we already anticipated slowdown to around 2%.
- Going ahead, we expect deceleration of the growth rate in the final quarter, mainly due to strong base effect from 4Q07 (caused by a pre-stocking of cigarettes ahead of the tax hike). We keep our 2008 annual growth forecast at 7.4%. The next year, we will likely see more visible slowdown to around 4.5-5.0%, due to worsened external environment and expected lower investment growth due to financial crises. Nevertheless, the Slovak growth should remain one of the strongest in the EU.
