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Slovakia: Monthly forecast
Changes over previous version
Fri, Feb 8 2008, 10:50 GMT
by Erste Bank Bond Research Team
Erste Bank der oesterreichischen Sparkassen AG
Growing fears that the economic growth in the Eurozone indeed slows down below its potential during 2008 erased the expectations for a 25bp rate hike by the ECB at end-2008. In turn, we anticipate flat European interest rates this year and a rate cut by the NBS in 2Q08 (to 4.0%). We increased our estimate of producer prices in 2008 due to revision of our expectations regarding energy prices for production sector (natural gas and heat).
Real economy
The Slovak economy likely reached the record growth rate in 2007, close to 9% after 8.5% seen in 2006. The economy benefited from established foreign direct investments, placed mainly in the automotive industry. In 2008, the growth will likely slow down slightly to 7.2% due to lower contribution of net export (the car factories will not deliver such one-off boost as was seen in 2007) and due to some slowdown of household consumption growth. The GDP growth should remain balanced (driven by both external and domestic demand).
External balance
The foreign trade deficit narrowed significantly from 4.5% of GDP in 2006 to projected 0.9% in 2007, as car exports revived strongly. Production of two newly built factories (PSA and KIA) should have increased from 80,000 cars in 2006 to almost 400,000 in 2007. Also, investmentrelated imports slowed down. Along with the trade balance, the current account deficit should have narrowed as well to around 4% of GDP. We expect the trade balance to register only a slight deficit next year.
Published on Fri, Feb 8 2008, 10:56 GMT
Archive
- Food and fuels have likely continued to weigh on inflation in June
Published On Mon, Jul 7 2008, 15:18 GMT - March 2008
Published On Fri, Mar 7 2008, 09:27 GMT - Changes over previous version
Published On Fri, Feb 8 2008, 10:50 GMT - Price development
Published On Fri, Dec 7 2007, 08:36 GMT - Price development
Published On Fri, Oct 5 2007, 08:11 GMT
Erste Bank
http://global.treasury.erstebank.com | Rainer.Singer@erstebank.at
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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.Interested in forex trading? forex brokerage firms!
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