Analysis: Growth Fueled by Car and Machine Industries

Bratislava, November 9 (TASR) - The Slovak industry was driven by automobile industry in recent months, although machine industry contributed to the growth as well and lagged only slightly behind the car makers, UniCredit Bank Czech Republic and Slovakia analyst Lubomir Korsnak said on Friday. According to the Statistics Office report, the industrial production scrunched down slightly in September by 0.2 percent (seasonally adjusted data). The dynamic of year-on-year growth also slowed down from 2.1 percent to 0.4 percent. Hence, in September, the industry recorded the slowest y-o-y growth in this year, save for the Easter March. The main driver of the economy in recent months was the car industry, the y-o-y growth of which decelerated from 15.5 percent to 10.1 percent. According to Korsnak, the slowdown of the sector can likely be attributed to the introduction of the new WLTP norm (Worldwide Harmonized Light Vehicles Test Procedure) and the lower car sales in Europe. A significant contribution to the growth was made also by the machine industry, the production of which swelled y-o-y by 26.5 percent that boosted the overall y-o-y industrial figures by almost 2 percentage points. Also faring well were the manufacturers of electric devices. "These three strong export segments contributed to the y-o-y growth of the Slovak industry in September by almost 5 percentage points," claimed Korsnak. Other sectors of the Slovak industry didn't see such positive developments, however, with y-o-y growth recorded only by pharmaceutical and food sectors. "On the contrary, a number of sectors saw y-o-y drop in production reaching into double digits (refinery, clothing/textile, furniture, chemicals and consumer electronics industries)," he claimed. A relatively dynamic growth continued in the construction, as its y-o-y growth accelerated from 10.7 percent to 12.5 percent. In the 3Q18, the dynamic of this sector sped up significantly and the construction is thus poised to become one of the main drivers of GDP growth, believes Korsnak. Despite risks in this segment being considerable, the construction is expected to preserve its growth trajectory in this year. The sentiment in the Slovak industry was the worst in October since January of this year. "It seems that the problems on the European market with new cars likely caught up to the Slovak producers in the sector, who assess the planned production quite negatively," thinks Korsnak, adding that the production could be bolstered by the launch of Jaguar Land Rover operation. mf