As can be read from Focus published by the Intesa Sanpaolo Study Centre, the dynamics of Slovakian real GDP slowed down to 2% in 2012 (from 3,2% in 2011) due to the contraction of the services sector (-8,9) despite the acceleration of the industrial sector (10,6% from 5,2% in 2011), made up of approximately 29% by the means of transport sector. During this year, external demand from the Eurozone weakened and the dynamics of Slovakian exports, equal to 8,6% y/y in 2012, decreased to 2,4% in the first eight months. The lower strength of exports is also penalizing industrial production which grew by only 2,9% in the January-August period.
On the demand side, the foreign trade balance is the only item in the national accounts to make a significant positive contribution to the GDP trend, where the contribution of the demand for final consumption is almost nil, while those provided by the demand for investments and public consumption are negative. What if difficult labor market conditions are weighing on domestic demand, some positive signals come from the improvement in consumer confidence and from the unemployment rate in September close to the lowest level of the year. Fiscal austerity is instead affecting the demand for public consumption which is estimated to be down again this year. In 2014 all productive sectors are expected to return positive with the industrial sector still leading the acceleration of the economy at 2,1%, while in 2014, in addition to exports, domestic demand should also make a positive contribution to the GDP trend thanks to the recovery of private consumption and investments. The contribution of public demand will still be negative.
Inflation, at 3,4% in December 2012, fell during 2013 to 1,0% in September, bringing the average for the first nine months of the year to 1,8%. Both external and internal factors contributed to the moderation of consumer price dynamics: while imported inflation was fairly moderate during 2013 as prices in global oil and food markets were subdued, domesticallyInstead, the absence of further excise increases and regulated energy prices had a dampening effect on inflation, as did the persistent weakness in demand. However the wage dynamics, albeit modest, should help bring inflation to almost 2% at the end of 2013, before a slight acceleration in 2014 (2,2% on average for the year) supported by a recovery in demand for private consumption.
For 2014, the current account is still expected to be positive, albeit slightly down in relation to GDP (2,5%). The short-term component of external debt represents around 30% of GDP and decreased compared to 2011 when it was 37%, while the medium-long term component, currently equal to around 46% of GDP, rose from 32% of 2011. In net terms, the country's financial position is negative and equal to 66% of GDP.
According to Intesa Sanpaolo, from a long-term perspective, the economic prospects of Slovakia remain positive in the progressive convergence of the economy to the member countries of the EMU. Overall though, the local competitiveness has not improved in recent years: the sectors that most penalize the competitiveness of the country are that of infrastructures, which are still inadequate, and the public sector, with a bureaucratic structure that is not fully efficient. Without forgetting the low diversification of production activity, still excessively strongly linked to the production of machinery and means of locomotion (over 50% of total exports). Here then is once again that macroeconomic stability, albeit highly appreciable, alone is not enough to lay the foundations for a relaunch that means development opportunities for production activities and therefore, ultimately, for the citizens themselves.
