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Slovakia: July 2009

Wed, Jul 8 2009, 08:12 GMT
by Mária Valachyová, Michal Musâk

Erste Bank der oesterreichischen Sparkassen AG


Price development

We expect annual consumer inflation to continue slowly declining in June, from 2.2% seen in May to 2.1% in June. On the month, we assume price growth by 0.2%, due to higher prices of gasoline and services. We expect prices of food to stay unchanged as compared to May. Harmonized inflation is likewise to decline, we expect it to shrink to below 1% y/y.

Real economy

Industrial production figure kicks out the monthly data package today. We expect slight improvement on an annual basis from April's -25% to around -21% in May due to base effect. July might bring some improvement on the monthly s.a. basis, as car plant KIA resumes back to standard 8-hour-working shifts since mid-July. In addition, US steel Kosice resumes its production back to full 5-day working week in July. Decline in industrial production can narrow to around 15% y/y during autumn in our view.

Monetary policy of ECB

The European Central Bank kept interest rates unchanged at the beginning of July. We keep our call that interest rates will remain unchanged at least until the end of 2009. At the moment, the ECB does not seem to be ready for any further non-standard measures (purchases of EUR 60bn covered bonds started at the beginning of July).


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Erste Bank http://global.treasury.erstebank.com | Rainer.Singer@erstebank.at

Legal disclaimer and risk disclosure

This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.

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