Tuesday, August 14, 2007

Slovak Growth

From Bloomberg today:

Slovak Economic Growth Accelerated in Second Quarter

Slovak economic growth accelerated to the second fastest in the European Union, led by exports of automobiles made by PSA Peugeot Citroen and Kia Motors Corp.

Gross domestic product grew an annual 9.2 percent in the second quarter, compared with 9 percent in the previous three- month period, the Slovak Statistical Office said in an e-mailed statement today, citing preliminary figures. The median estimate of 11 economists polled by Bloomberg was 9.3 percent. The final report, including a breakdown, is due on Sept. 4.

``Growth continues to be driven by both exports and household consumption,'' said Juraj Valachy, an economist at Tatra Banka AS in Bratislava, said before the release. ``The expansion is non- inflationary and there aren't signs of overheating.''

Peugeot Citroen of France and South Korea's Kia began production in Slovakia last year, benefiting from cheaper labor and lower taxes than in western Europe. Rising exports combined with increasing employment have helped economic growth surge, trailing only Latvia in the 27-nation EU.

Rising activity by exporters is also helping the economy to add jobs, boosting domestic demand, economists said. The office reported today the number of people with jobs rose 2 percent from the same period 2006.

Koruna Price

The koruna was trading at 33.49 against the euro at 10:07 a.m. in Bratislava, down from yesterday's close of 33.44. It has gained about 12 percent in as many months, buoyed by prospects of growth and optimism that Slovakia will adopt the euro in 2009.

Peugeot shipped almost 52,000 vehicles in the second quarter, matching the output for all of 2006, the company said. The unit wants to produce more than 180,000 cars in its Trnava, Slovakia, factory this year.

Kia's Slovak unit assembled about 37,000 cars in the period, spokesman Dusan Dvorak said. The factory in Zilina started to assemble Kia's ``cee'd'' model in December, so the second-quarter production will be fully reflected in GDP growth figures.

The central bank doesn't need to be concerned about accelerating growth since the pickup is due mostly to rising capacity in the economy, economists said.

Slowing inflation and the creation of new jobs, which pushed the unemployment rate to a record-low 8.2 percent last month, continued to fuel household spending. Retail sales growth averaged 7.8 percent in the second quarter, more than double the pace the first three months.

Valachy forecasts 2007 expansion at a record 9 percent, a touch above the central bank's prediction of 8.9 percent.

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