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Tag: slovakia economy

  • Annual inflation rate reached 2.1% in Slovakia, in April

    Annual inflation rate reached 2.1% in Slovakia, in April

    In April 2020, the annual inflation rate measured by the harmonized index of consumer prices reached 2.1%, latest data from the Statistical Office of Slovakia show.

    The average annual inflation rate (expressed as the change in the average harmonized index of consumer prices over the last 12 months compared with the average of the previous 12 months) was 2.9 % in April 2020.

    The month-on-month harmonized index of consumer prices of 99.9% was most affected by lower prices in the division Transport (negative contribution -0.29 percentage points); of which the development of fuel prices was responsible for the decline by -0.27 pp.

    The decrease in prices in the division Alcoholic beverages and tobacco is responsible for the negative contribution of -0.04 pp, caused mainly by a decrease in prices of spirits (contribution -0.03 pp).

    The highest positive contribution in the index was recorded in the division Food and non-alcoholic beverages – 0.14 pp, of which increase of food made up 0.15 pp (increase in prices of vegetables 0.10 pp, fruits 0,03 pp and bread and cereals 0.03 pp) and decrease of non-alcoholic beverages: -0.01 pp.

    In the division of Clothing and footwear, there is a seasonal character, which was taken into account when choosing the method of imputation of uncollected prices, while the total contribution to the aggregate index was 0.07 pp.

    The contributions of other divisions reached from -0.02 pp to 0.03 pp.

  • Fitch downgrades Slovakia. The outlook is stable

    Fitch downgrades Slovakia. The outlook is stable

    Fitch Ratings has downgraded Slovakia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘A’ from ‘A+’. The Outlook is stable.

    Fitch forecasts that real GDP will shrink by 10% in 2020, as Slovakia’s open economy is hit by the COVID-19 pandemic. External demand will be significantly weaker and restrictions on activity will depress domestic demand.

    A lockdown of economic activity (in place since 13 March) will be progressively loosened from mid-May and the economy will begin recovering from the second half of 2020, with growth forecast at 6.8% in 2021.

    The auto industry, which accounts for 13% of GDP and 24.2% of exports (2018), shut down production as the lockdown was imposed, before restarting phased operations from mid-April. Fitch expects that planned investments for capacity expansion will be subject to renewed uncertainty given that external demand will take time to recover.

    Fitch has sharply revised its general government balance forecast downwards to -7.7% of GDP for 2020 (previous review: -0.8%; 2019: -1.3%), compared with a current peer median of -8.5%.

    The government has announced support measures worth around 6% of GDP, which will comprise direct fiscal support, liquidity support and guarantees.

    Of these, the fiscal cost of wage payments under the Kurzarbeit scheme is expected to amount to 1.6% of projected 2020 GDP, while the introduction of a recurring 13th month pension will cost an estimated 0.7% of GDP.

    Fitch expects revenue to decline by 10.5% in 2020 (equivalent to 1.1pp of GDP), as tax and social security receipts fall due to the economic contraction.