Economy is slowing down as automotive suppliers are in trouble
The Slovak economy’s expansion has slowed down to just 1.3% in the third quarter, according to the statistics office ŠÚ’s flash estimate.The growth pace is the slowest since 2013, and just five EU countries have reported slower growth. Domestic consumption remains robust, courtesy of low unemployment and strong wage growth. The slowdown comes on the back of a weak automotive sector. Germany avoided recession (it posted a quarterly growth of 0.1% in 3Q following a 0.2% contraction in 2Q), but its weak demand impacts Slovak industry. It seems likely that the rapid wage growth undermines competitiveness of the Slovak car component makers who lose contracts to their cheaper competitors in Hungary and Poland.
Analysts expect GDP growth of around 2.5% this year and next.