Slovakia: Economic growth was slightly revised up to 4.7% y/y
Thursday, September 2, 2010
, Posted by Usman Ali Minhas at 8:14 AM
Slovakia: 2Q10 GDP growth
Economic growth was slightly revised up to 4.7% y/y
- The Statistical Office slightly revised its flash estimate of 2Q GDP growth up to 4.7% from previous 4.6%. Quarterly seasonally-adjusted growth was confirmed at 1.2%.
- Detailed GDP growth structure revealed that inventories were the key growth driver in 2Q. After declining by almost EUR 2bn last year, we expected that stock depletion would come to a halt at some point, as increasing production activity suggest. Indeed, after falling by EUR 220 mil in the first quarter, inventories finally increased by almost EUR 300 mil in the second quarter, adding as much as 5 percentage points to the annual GDP growth in 2Q10. Within inventories, especially stock of unfinished production and material increased, sending positive signal for future production. Although gross fixed investments still declined y/y, we expect turnaround also in this category in the coming quarters.
- Household consumption remained still weak, when it declined by 1% over year ago, reflecting difficult situation at the job market. However, first glimpse of improvement can be seen also here. Labor office statistics showed improvement and decline of unemployment rate since February, and finally, figures of the Stats Office (survey method) started to show similar tendency - seasonally adjusted employment increased by 0.7% q/q, putting unemployment rate at 14.4%, down from 15.1% in 1Q10. Thanks to somewhat brighter situation at the labor market, household consumption could also return to positive figures in the coming quarters; although its contribution to the growth will stay muted (we expect annual consumption growth within 0-0.5% y/y in 2010).
- The economic growth was driven mainly by stock contribution, although net exports contributed positively as well (but into less extent than investments).
- For the full year 2010, we expect GDP growth at around 4%. GDP growth rate is likely to slow-down in 2H10 on an annual base due to stronger base affect from last year. Also, strong quarterly growth rates seen in 1Q and 2Q might not repeat in the second half of 2010 along with expected slow-down in the Euro-area.
