Slovakia: GDP growth moderates in the third quarter
According to a preliminary estimate, GDP growth moderated to 1.3% year-on-year in the third quarter from 9.6% in the second quarter, undershooting market expectations. The weaker reading was in part due to a waning base effect, but not entirely. On a seasonally-adjusted quarter-on-quarter basis, economic growth lost steam in Q3, easing to 0.4% from the previous period’s 1.9% expansion.
Although a detailed breakdown is not yet available, the external sector seemingly weighed on the annual reading in Q3. The auto industry in particular will have detracted from the growth figure amid ongoing semiconductor shortages and supply bottlenecks. That said, robust domestic demand amid a lower Covid-19 caseload likely avoided a further deterioration of activity.
Heading into Q4, a winter wave of Covid-19 bodes poorly for private consumption. Meanwhile, industry is likely to continue struggling amid persistent supply bottlenecks and high energy prices. That said, a falling unemployment rate should support spending somewhat.
Erste Bank’s Matej Hornak highlights the contrasting performances of the domestic and external sectors in Q3:
“Summer season, combined with the improved pandemic situation, has lent a helping hand also to the hardest-hit services sector such as restaurants, hotels, and tourism in general. Based on the retail sales data and payments of our clients, household consumption seems to be an important positive driver as well. As foreign trade figures indicate, contribution of foreign demand is expected to be negative. On the one hand, value of exports suffered to some extent from a lack of semiconductors, on the other hand, a rebound in domestic demand caused a swift growth of imports.”