Slovakia's gross domestic product (GDP) increased by 1.9% year-on-year in fixed prices in the second quarter of 2019, which however represents a significant slowdown to the growth of 3.7% in first quarter of 2019, according to the Statistics Office. In the inter-quarter comparison, the GDP grew by 0.4%. Thus, according to the SME daily, the economy is lagging behind the expectations of analysts, who expected the year-on-year as well as the inter-quarter growths to be almost twice as fast - at the levels of 3.3% and 0.7% respectively.
According to Ľubomír Koršňák, an analyst from the Unicredit Bank, Slovak economic growth "almost collapsed." While the economy resisted a weakening in external demand in the first quarter, it was completely impacted in the second one. The slowdown could be observed in most European economies, however, not to such a large extent as in Slovakia.
According to Koršňák , June showed that not even the addition of the new carmaker Jaguar-Land Rover can fully cancel out the decline in external demand. Nevertheless, he pointed out some factors behind the drop, which might only be a one-off rather than permanent. He listed the construction sector, which is facing problems with infrastructure and could be revived thanks to the ending Euro fund term. The petrochemical industry, which represents 0.5% of the economy, also recorded a significant drop, due to planned maintenance on the production machine in the Slovnaft oil refining company.
Koršnák believes that the mood in the European economy indicates that economic growth should continue to weaken. It should be felt not only in the domestic economy but also in household consumption and investment. Uncertainty regarding Brexit and protectionist measures in the global economy are the main risk factors in the external environment. Slovakia significantly depends on it and simultaneous effects could eventually erase the country's economic growth, writes Koršňák.
According to him, the government cannot help in this situation, as the country did not use the good times to consolidate public finances the economy's positive performance was "literally overeaten," concludes Koršňák.
