Slovakia GDP Q4 2015


Economy in Q4 expands at fastest pace in five years

Healthy dynamics in the job market continued to support private consumption in Q4, while support from European Union funds strengthened investment. Moreover, still resilient exports shored up activity in the external sector. As a result, in the fourth quarter, GDP grew 4.3% annually, which represented the fastest acceleration in five years. The print was a notch above the 4.2% growth reported in the preliminary estimate and overshot the 3.7% increase tallied in Q3. On a sequential basis, the economy grew a seasonally-adjusted 1.0% in Q4, which matched the result tallied in Q3.

As expected, domestic demand led growth in Q4, with private consumption expanding 2.9% annually (Q3: +2.7% year-on-year) and gross fixed capital formation accelerating to an over 10-year high (Q3: +17.3% yoy; Q4: +19.4% yoy). On the contrary, the ongoing consolidation process drove growth in government spending to moderate in the final quarter of 2015 (Q3: +5.2% yoy; Q4: +3.2% yoy).

On the external front, a weak euro supported the 9.2% expansion in exports of goods and services in Q4 (Q3: +7.3% yoy). Growth in imports followed suit and rose to 10.5% (Q3: +9.9% yoy). As a result, the external sector’s net contribution to overall economic growth improved from minus 1.7 percentage points in Q3 to minus 0.7 percentage points in Q4.

In the full year 2015, Slovakia’s economy expanded 3.6%, which was above the 2.5% rise tallied in 2014.In the political arena, Robert Fico’s ruling Smer-Social Democracy party (Smer-SD) won the 5 March parliamentary election. While the (Smer-SD) lost its majority, Fico managed to build a four-party coalition. The new government plans to cut taxes on businesses and increase social spending. These initiatives will delay the target for a balanced budget by two years to 2020.

The National Bank of Slovakia (NBS) projects that GDP will grow 3.2% in 2016 and 3.3% in 2017. FocusEconomics Consensus Forecast panelists expect GDP growth to reach 3.1% in 2016, which is down 0.1 percentage points from last month’s forecast. For 2017, the panel also projects that economic growth will increase 3.2%.

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Slovakia GDP Chart

Slovakia GDP Q4 2015 1

Note: Year-on-year changes of GDP in %.
Source: Statistical Office of the Slovak Republic (SOSR) and FocusEconomics Consensus Forecast.

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