IFP: Slovakia's convergence on EU economy slower than before crisis

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IFP: Slovakia's convergence on EU economy slower than before crisis

12. 01. 2018 14:41

Slovakia continues to come closer to the level of the EU economy performance, albeit at a slower pace than before the economic crisis that erupted almost a decade ago, the Slovak Finance Ministry's Finance Policy Institute (IFP) stated in a commentary on Thursday. Slovakia's so-called convergence on the EU was significantly affected by a massive increase in Ireland's real GDP for 2014-2015. Had it not been for that, Slovakia's economic performance would be at a level of 78 percent compared to the EU one, according to the institute's analysts. They point out, however, that Slovakia's model involving the growth of nominal income at the same pace as elsewhere in Europe, but with slower inflation, is not sustainable in the long term. They expect inflation to accelerate in the future.

Meanwhile the Slovak Statistics Office reports that the industrial production accelerated in November by 6.2 percent year-on-year. The automotive industry was the workhorse of Slovakia's industry in this period, as its output after seasonal adjustments increased by 12.2 percent on an annual basis to reach new heights, according to UniCredit Bank Czech Republic and Slovakia analyst Ľubomír Koršňák. Food producers have also been posting robust growth in recent months but the highest annual growth was again posted by chemicals producers (33.9 percent). The analyst pointed out that electronics producers have been struggling for some time in Slovakia. "Even though it's a high-tech sector, activities with a high involvement of manual labour and lower added value have been prevailing in Slovakia. Salary pressure has thus been chasing production away to cheaper countries, such as Poland, which has also been witnessing dynamic salary growth, albeit significantly weaker than in Slovakia. Moreover, the key producers in the sector are located in western Slovakia, which has seen the most pronounced lack of labour and therefore also the strongest pressure on salary growth," said Koršňák.

Anca Dragu, Photo: TASR

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