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Slovakia: 3Q09 GDP growth

Thu, Dec 3 2009, 11:27 GMT
by Mária Valachyová

Erste Bank der oesterreichischen Sparkassen AG  |  View company's profile

Foreign demand supported economy, domestic demand remains weak

• Today, the Stats Office released national accounts for 3Q 2009 as well as revised data for previous years. The annual 3Q09 decline was slightly revised for the better to -4.8% from previous -4.9% y/y, while quarterly seasonally-adjusted increase was confirmed at 1.6%.
• The 3Q GDP structure revealed expected structure - the economy was supported by ongoing recovery in the Euro area and foreign demand (as merchandise trade surpluses suggested), while domestic demand remained weak. Gross investments declined almost 20% as compared to year ago, although the balance between fixed investments and stocks was different than we thought. Positively, decline in fixed investments narrowed to -11% from -17% y/y seen in 2Q09, while the cycle of inventory depletion seems to have continued, when stocks depletion contributed to the GDP growth the same negative 3 percentage points as in the previous quarter. The return to stock accumulation is likely to support the growth during the first half of 2010.
• Household consumption declined only slightly, by 0.3% y/y. We expected somewhat bigger decline given increasing unemployment rate, which rose to 12.5% (ILO methodology), 3.5 percentage points up from 3Q08. Employment declined by 4.3% y/y (which means that more than 100ths workers were laid-off).
• The Statistical Office released revisions of quarterly data for 1995-2008. Increase in the last quarter of 2008 was revised downwards from 2.5% to 1.6%, creating somewhat more positive base for 4Q09 GDP growth rate. Nevertheless, the economy should still decline in 4Q09, by about 4-4.5% in our view. Regarding coming quarters, gradual recovery in Euro area should help the Slovak economy, although quarterly growth rates will likely be smaller than in 3Q09. On an annual basis, we expect GDP to return to growth from the first quarter 2010 on and continue to see the full-year growth at around 2.5% in 2010.

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Published on  Thu, Dec 3 2009, 11:30 GMT

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