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Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
Slovakia 2013-2014
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Slovakia 2013-2014

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  • 1. SLOVAKIA September 6th, 2013
  • 2. Political development • Social-democratic government with strong mandate • Social-democratic Smer party with over 55% of seats in the Parliament • The election victory in the spring 2012 helped to form a one-party government with a simple majority • Regional elections in autumn 2013 • Presidential elections in May 2014 (PM Fico to candidate?)
  • 3. Economic fundamentals • Slovakia has low public debt (52.1% of GDP) compared to EU (85.3%) and EMU average (90.6%) • The level of private debt is also very low (76.3% of GDP) – the fourth lowest private debt/GDP ratio in EU • Basicly no real exposure to FX loans • Sound banking sector which is not too big compared to the economy (less then 82% of GDP, well below the EU average) • Commitment to cut deficit below 3% of GDP and it was reduced by 0.8 ppt last year • Slovakia participates in the European Stability Mechanism
  • 4. Structure of the Economy 3% 30% 9% 16% 4%3% 5% 6% 12% 3% 9% GDP by branches Agriculture, forestry and fishing Industry total Construction Wholesale and retail trade Information and communication Financial and insurance activities Real estate activities Professional, scientific and technical activities Public administration and defence
  • 5. Economic growth 4,4 0 1,4 3,5 4,6 4,8 5,1 6,7 8,3 10,5 5,8 -4,9 4,4 3,2 2 0,5 1,5 -7 -5 -3 -1 1 3 5 7 9 11 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 GDP growth and forecasts (y-on-y in %) -10 -5 0 5 10 15 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 Economic growth (quarterly, yon-y in%) GDP (y-on-y)
  • 6. Foreign demand – the main engine of growth • Slovak economy grew by 0.3% qoq, 0.9%yoy repectively in Q2 2013 • This represent a mild acceleration from 0.6% in Q1 2013 • The main and only positive contribution in 2012 came from foreign demand • The same development prevailed in Q1 2013 • But the household consumption revived in Q2 2013 and returned to growth for the first time since Q3 2009 (already signalled by the retail sales growth in Q2, first after 4 years) • Real wages accelerated to 1.6% in Q2 2013 from 0.3% in Q1 positively influenced by the decline of inflation • Government spending decreased by -0.1% in Q2 after -0,6% in Q1 • Investments (GFCF) recorded a decline of -6.4% yoy (-8.4% in Q1) and are on negative trajectory for aproximately one and a half year
  • 7. Domestic demand •Household consumption decreased by -0.6% yoy in 2012 •The retail sales confirmed the weakness of domestic demand as they droped by -1.0% in 2012. However, it revived in Q2 2013 for the first time after 4 years. •The revival of consuption is supported by the rise of real wages, first after 2 years of a decline. •The unemployment rate is still relatively high – stabilizing above the long run average at 14% (LT avg 13.5%) •SOSR reported decline of unemployment from 14.5% to 14% in Q2 2013 •The real wages increased by 1% in H1 2013 (Q1 +0,3% and Q2 +1,6%) •But declining inflation also helped (3.2% in December 2012 vs. 1.5% in July 2013)
  • 8. Unemployment rate 6 8 10 12 14 16 18 20 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Unemployment Unemployment rate (%) LT average (1993-2013)
  • 9. Foreign trade •Foreign trade underwent a big change since 2008 •It was the last year when trade was in the red figures •The merchandise trade moved from EUR -760 mil. in 2008 to EUR +3.6 bn in 2012 (+5.1% of GDP) •The trade surplus even increased by almost 50% in H1 2013 compared same period of the previous year (1.9bn EUR vs. 3.0 bn EUR) •The export growth outperformed import (10.7% y/y vs. 6.2% y/y in 2012) mainly thanks to auto export and dampened imports •Export and import dynamics decelerated in 2013 but export still outperforms import •This year the foreign demand is the main engine of growth thanks to auto sector and its export
  • 10. Industrial production • The main driving forces of improvement in foreign trade were the new export capacities in the manufacturing sector, namely automotive industry • Car producers increased the production by almost 50% y/y in 2012 but the scope for further rise is limited due to production limits (close to 900 thousand) • Industrial production rose by 2.6% y-on-y in H1 2013 after rise by 8.1% in 2012 • The main driving force remains auto production and steel • VW and KIA reported rise of production by about 5-6% y-on-y in H1 2013 (in pieces) • Some auto makers are increasing its market share or starting to export more to BRIC countries
  • 11. Structure of the Slovak industrial production Share from total Industry total Mining and quarrying 0,7% Manufacturing 81,7% Manufacture of food products, beverages and tobacco products 5,6% Manufacture of textiles, apparel, leather and related products 2,0% Manufacture of wood and paper products, and printing 4,3% Manufacture of coke, and refined petroleum products 5,7% Manufacture of chemicals and chemical products 3,3% Manufacture of pharmaceutical medic., chem.and botanical prod. 0,4% Manufacture of rubber and plastic products and oth. non-metallic mineral products 6,9% Manufacture of bas.metalic and fab.metalic products except machinery and equipment 12,2% Manufacture of computer, electronic and optical products 7,9% Manufacture of electrical equipment 3,4% Manufacture of machinery and equipment n.e.c. 4,1% Manufacture of transport equipment 22,2% Other manufacture, repair and installation of machinery and equipment 3,6% Electricity, gas, steam and air-condition supply 16,4% Water supply, sewerage, waste manag. and remediation 1,3% 100,0%
  • 12. Car production 0 100.000 200.000 300.000 400.000 500.000 600.000 700.000 800.000 900.000 1.000.000 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f Slovak car plants (production in pcs) VW PSA Peugeot Citroen Kia Motors Slovakia
  • 13. Inflation -8,0 -6,0 -4,0 -2,0 0,0 2,0 4,0 6,0 8,0 10,0 12,0 jan/05 apr/05 jul/05 okt/05 jan/06 apr/06 jul/06 okt/06 jan/07 apr/07 jul/07 okt/07 jan/08 apr/08 jul/08 okt/08 jan/09 apr/09 jul/09 okt/09 jan/10 apr/10 jul/10 okt/10 jan/11 apr/11 jul/11 okt/11 jan/12 apr/12 jul/12 okt/12 jan/13 apr/13 jul/13 Inflation development (y-on-y in %) Headline inflation Food
  • 14. Public finance deficit • The public finance deficit was reduced from -8% of GDP in 2009 to - 4.3% of GDP in 2012 • The budget deficit declined by 0.8ppt of GDP during the first year of the new social-democratic government (from -5.1% to -4.3%) • The original government target was 4.6% of GDP • The main cabinet priority for 2013 is to lower the public finance deficit below 3.0% of GDP • The government debt increased from 49% to 53% of GDP but stayed well below the EMU average (90.6% in 2012) • Debt to GDP ratio could attack 55% threshold this year
  • 15. New budgetary measures • Government decided to achieve its goals by implementation of various measures mainly on the revenue side of the budget • The fiscal tightening should be worth 4.6% of GDP over 2011 – 2013 • Higher income taxes • Higher dividends from state run companies • Higher caps on social contributions • New levy on bank liabilities • But also on the expenditure side: savings by the state administration • Pension system reform: linking retirement age to life expectancy and contributions partially moved from second private pillar to first pillar • New fiscal responsibility act with a debt brakes • Independent fiscal council
  • 16. Public finance deficit -1,8 -2,1 -8 -7,7 -5,1 -4,3 -2,94 -9,0 -8,0 -7,0 -6,0 -5,0 -4,0 -3,0 -2,0 -1,0 0,0 2007 2008 2009 2010 2011 2012f 2013f Public finance deficit (in % of GDP)
  • 17. Public debt 42,4 41,43 34,17 30,9 29,6 27,9 35,6 41 43,3 52,1 0,0 10,0 20,0 30,0 40,0 50,0 60,0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Public debt (% of GDP) Public debt
  • 18. Banking sector • Slovakia has sound and highly liquid banking sector without any government assistance • The size of the banking sector: assets to GDP ratio at 82% in 2012 which is below EU average • The banks are focused mainly on products of classical banking (corporate and retail loans) • Loan to deposit ratio is below the 100% threshold and therefore the sector is not dependent on the external fianncing • Private debt to GDP ratio is at 76.3% of GDP and is one of the lowest within the EU • There is only a very limited risk of debt surprises as banks are well capitalised
  • 19. Thank you for your attention

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