Slovakia: Economic growth plunges to over six-year low in Q3
December 5, 2019
The economy grew 1.3% year-on-year in the third quarter, down from the second quarter’s 2.2% expansion, according to detailed national accounts data released on 5 December. The reading was the lowest since Q2 2013.
Household spending growth lost some pace in the third quarter, moderating to 1.8% from Q2’s upwardly revised 2.7% rise (previously reported: +1.9% year-on-year), while government expenditure growth decelerated to 3.7% from Q2’s revised 5.0% increase (previously reported: +4.2% yoy). For its part, fixed investment jumped 7.8%, which was up markedly from Q2’s revised 2.4% expansion (previously reported: -3.7% yoy), cushioning the overall slowdown.
On the external front, exports contracted for the second consecutive quarter in Q3 amid the gloomy economic backdrop in the EU, albeit at a slower pace than in the previous period (Q3: -0.2% yoy; Q2: -0.9% yoy). Meanwhile, import growth accelerated to 3.3% from Q2’s revised 1.5% rise (previously reported: -0.8% yoy). Taken together, the external sector weighed notably on activity in the third quarter.
On a quarter-on-quarter, seasonally-adjusted basis, GDP growth in the third quarter came in at 0.4%, up from the 0.3% expansion logged in Q2.
Economic activity should remain broadly stable next year, despite the challenging external backdrop. Strong household consumption, underpinned by a tight labor market, should support the economy, while investment growth is seen picking up amid increased EU funds inflows and growing car production capacity. A hard Brexit and prolonged weakness in Germany, however, pose risks to the outlook.
Author: Hanna Andersson, Economist