The growth in the Slovak economy in the second quarter of this year was driven mainly by automotive companies, while it was held back by household consumption, said UniCredit Bank analyst Lubomir Korsnak in his commentary on the preliminary estimate of GDP growth and employment released by the Statistics Office earlier on Tuesday.
Slovakia's GDP in fixed prices grew by 1.5 percent year-on-year (y-o-y) in the second quarter of 2023, according to the aforementioned estimate. After seasonal adjustments, GDP rose by 1.3 percent y-o-y in the second quarter of this year and went up by 0.4 percent from the previous quarter.
"The Statistics Office will publish the structure of growth along with detailed data only at the beginning of September. However, macroeconomic figures that are already known indicate that the economy was mainly fuelled by domestic carmakers. An easing of 'bottlenecks' enabled them to restart production, which persisted in the second quarter as well. The higher output of the domestic automotive sector also positively influenced Slovakia's trade balance. Conversely, the negative effects of record inflation were increasingly felt in household consumption. It didn't support growth but rather hindered it," stated Korsnak.
"Slovakia's economy should still be firmly supported by public investments in the second half of the year. Higher public investment might more than fully compensate for weakening private investment, which should follow the economic cycle and rising interest rates," noted Korsnak.
"At the moment we expect GDP growth to accelerate towards 2 percent next year. However, the outcome of the general election might have a significant impact on GDP growth next year, determining the extent and manner of a necessary consolidation of public finances," added the analyst.
Following two quarters of GDP growth, the possibility of a recession this year seems very unlikely considering the expected fiscal stimulus of €5 billion from EU funds (approximately 5 percent of GDP), said Slovenska sporitelna analyst Marian Kocis.
"The determining factor will continue to be our country's ability to absorb this money efficiently and quickly. We expect overall y-o-y GDP growth in 2023 to amount to 1.5 percent, which is a slight decrease compared to last year," stated Kocis.
Source: TASR
