Slovakia: Economic growth picks up in Q4 2019
A second estimate revealed the economy grew 2.0% year-on-year in the fourth quarter of last year (previously reported: +2.1% year-on-year), up from the 1.3% expansion in the third quarter which had marked the lowest result since Q2 2013. On a quarter-on-quarter basis, the economy grew 0.6% in Q4 (Q3: +0.4% quarter-on-quarter). Taking the year as a whole, growth decelerated to 2.3%, markedly down from 4.0% in 2018.
The fourth-quarter acceleration largely reflected improving domestic demand. Household spending gathered momentum in Q4 on the back of healthy wage growth and a tight labor market (Q4: +2.1% yoy; Q3: +1.8% yoy), while government consumption increased 3.9%, up from 3.7% in Q3. On the flipside, fixed investment growth moderated to 6.2% in Q4 (Q3: +7.8% yoy), likely as subdued economic activity in Germany weighed on the all-important automotive sector.
On the external front, exports contracted for the third consecutive quarter in Q4 amid the gloomy economic backdrop in the EU (Q4: -0.5% yoy; Q2: -0.2% yoy). Similarly, imports fell 0.5% after Q3’s 3.3% increase.
The economy is expected to grow at a robust pace this year, underpinned by healthy domestic demand amid buoyant private consumption and a tight labor market. However, key risks to the outlook are the industrial sector’s high dependence on diesel-related technologies, as consumers switch to electric vehicles, and sluggish global demand.