Slovak industrial output recorded its biggest slump in a decade in December due to global economic weakness, data showed on Monday, and analysts saw no early recovery in the newest euro zone member’s economy.
Industrial production nosedived by 16.8% year-on-year in December, the sharpest fall since the current methodology was introduced in 1999, after a revised annual drop of 7.2% in November, the Slovak Statistics Office data showed. Analysts surveyed by Reuters expected industrial output to fall by 10.0%.
“(December) figures were in line with other neighboring countries, the Czech republic, Poland, Hungary,” said Tatra Banka analyst Juraj Valachy. “January figures will be even worse.”
Slovakia’s small and open economy has avoided direct impact from the financial turmoil on its banks, but it is now feeling the effect of the crisis as demand for its goods, mainly cars and television sets, weakens in key export markets.
Automotive sector production plummeted by 35.7%, compared with a 16.9% decline in November, while the electronics industry showed a 12.2 annual drop. Slovakia assembles and exports models for Germany’s Volkswagen, France’s PSA Peugeot Citroen and South Korean Kia Motors Corp. The three plants have combined output capacity of around 900,000 units a year.
Car factories expect their production to fall by up to 25% this year as the global economic crisis curbs demand in the main western markets, and analysts said such a scenario puts even latest economy growth forecasts for 2009 at risk.
Economic growth will slow down sharply to 2.4% this year, which will cut state revenues and may boost the fiscal deficit, the finance ministry said last week. The ministry previously expected the economy to rise by 4.6% in 2009. (Reuters)