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Analysts: Slovak Economy Supported by Foreign Demand in 4Q09
Thursday 04 March 2010 Zoom in | Print page
Bratislava, March 4 (TASR) – Slovakia's economy was given a leg-up by foreign demand in the final three months of 2009, which helped to limit the deterioration in GDP from a fall of 4.9 percent year-on-year in the third quarter to one of 2.6 percent in 4Q09.
The country's economy grew by 2 percent quarter-on-quarter, but domestic demand remained weak, according to economic analysts. "GDP was supported especially by improvements in the foreign-trade balance. Government consumption had a positive influence as well," said ING Bank analyst Eduard Hagara, adding that the economy was slowed down by low investment activity and poor consumer demand caused by persisting negative developments on the labour market.
The fall in household consumption deepened from 0.3 percent in 3Q09 to 2 percent in the final quarter. "We view this development as the result of the growth in unemployment, which was also translated into a drop in retail sales, and the end of the scrapyard contribution programme," said Maria Valachyova from Slovenska Sporitelna, adding that the unemployment rate in the final quarter grew to 13.9 percent, with the number of employed people falling by 5.5 percent year-on-year. "We expect unemployment to affect household consumption in the following quarter as well," said the analyst.
Hagara expects quarter-on-quarter growth to decelerate this year, in particular due to external effects. The performance of Slovakia's biggest business partners in 4Q09 was weaker and the economic sentiment in the eurozone improved only slightly in the first two months of this year," he noted. "We can't rule out in the y-o-y comparison that growth will be reported with a very nice figure of around 5 percent due to the low figures for comparison," said Hagara.
According to Valachyova, economic growth could be strengthened thanks to stocking-up in response to economic recovery. She foresees 3- or 4-percent growth in the first quarter of 2010 thanks to the low figures for comparison, but expects the growth to decelerate quarter-on-quarter with the overall figure for 2010 reaching 2.6 percent.
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