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Analysts: Foreign Demand Behind Better Than Expected Growth in 2Q10
Friday 13 August 2010 Zoom in | Print page
Bratislava, August 13 (TASR) - Slovakia's economy expanded faster than analysts expected in the second quarter of 2010, rising by 4.6 percent according to a preliminary estimate released by the Statistics Office on Friday, versus the average analyst prediction of 4 percent.
The analysts see foreign demand as the main reason behind the robust growth.
"Slovakia's economy in the second quarter was largely driven by industry and foreign trade. We aren't overly optimistic, nor are we anticipating substantial growth in regard to household consumption," said Postova banka analyst Eva Sadovska, who believes that consumer demand is being hampered by fairly high unemployment.
Slovenska Sporitelna (SLSP) savings bank analyst Maria Valachyova ascribes the better-than-expected result to a strong pick-up in the eurozone, notably in Germany, whose economy, according to data published on Friday, grew by 2.2 percent on a quarterly basis, the fastest growth in the past twenty years or so. "No less than 20 percent of our exports are destined for the German market, making that country our main trading partner," said Valachyova.
July's upswing in Slovak and German industry, according to ING analyst Eduard Hagara, implies that even early in the third quarter of this year foreign demand is the main engine of growth. "Weaker performance figures coming from the United States of America of late, however, hint that the global economy could face a slow-down in growth in the second half, which would hit Slovakia's economy just as hard," she said.
Prospects for domestic demand remain inauspicious. "Stagnant employment in the second quarter of the year as well as heralded cuts in general government salary spending hold out little hope for a substantial increase in consumer demand," said Hagara.
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