Slovakia: Economy records first expansion since Q4 2019 in first quarter
June 4, 2021
A second reading confirmed that GDP bounced back in the first quarter, expanding 0.2% year-on-year (previously reported: +0.3% year-on-year) and contrasting the 2.1% contraction logged in Q4 2020. Q1's reading marked the first expansion since Q4 2019.
Q1’s upturn was largely driven by an improvement in the external sector. Exports of goods and services grew at a faster pace of 10.0% year-on-year in the quarter, following Q4 2020’s 0.5% expansion. Moreover, imports of goods and services expanded 5.4% in Q1, contrasting Q4’s 0.9% drop and marking the best reading since Q1 2019.
On the domestic front, household spending fell 5.8% in Q1, which was below the fourth quarter's 1.5% contraction. Government spending, meanwhile, fell back into contraction, declining 1.8% (Q4 2020: +3.4% yoy). More positively, fixed investment fell at a softer pace of 10.0% in Q1, following the 16.2% decrease in the prior quarter.
On a seasonally-adjusted quarter-on-quarter basis, GDP declined 2.0% in Q1 (previously reported: -1.8% s.a. qoq), contrasting the previous period's 0.8% growth.
Looking at the year as a whole, GDP is expected to continue growing, supported by a solid expansion in domestic activity, while firming foreign demand amid the gradual removal of restrictions should support the all-important car industry. However, a slower-than-expected vaccine rollout and disagreements within the governing coalition represent risks to the outlook.
Author: Hanna Andersson, Economist