Slovakia's GDP output in fixed prices in the first quarter of 2020 posted a fall of 3.7% year-on-year. As the Statistics Office reported, this is the first drop after ten years of continuous growth. After seasonal adjustments, GDP in 1Q20 fell by 5.2% quarter-on-quarter. Some of Slovakia's key sectors reported a slowdown as early as in the first two months of the year, with the announcement of the 'state of alert' related to coronavirus in March weakening the country's economy even further.
At the time of the coronacrisis, Slovakia is paying the price for its high level of dependence on exports. "Exports of goods and services shrunk in the January-March period in terms of final prices by at least 7% percent, whereas imports only fell by 1.5%," claimed VÚB analyst Michal Lehuta. He added that another adverse factor was the decrease in investment activity (by 4.8%).
It was the pronounced y-o-y drop in the construction that posed as a great surprise to the analysts. "The construction production was on a growth trajectory at the turn of the year and even the month of March, affected by the pandemic, didn't see any significant slump in the construction production," noted Ľubomír Koršňák analyst of the UniCredit bank. Somewhat less of a surprise was the scrunching of the financial sector, seeing as this sphere often shows increased volatility.
The analysts expect an even more significant y-o-y slump in the Slovak economy in 2Q20. "Unlike in the 1Q20, the pandemic won't hit in only a single month this time, but essentially throughout the whole quarter," warned Koršňák. The downward spiral in GDP is likely to slow down in the second half of 2020, although Koršňák believes that Slovakia will not be able to avoid a double-digit drop in yearly GDP, even if there is no second wave of the outbreak.
