UPDATE 1-Slovak March trade gap widens, market still upbeat

...during this 
year as new car factories step up production. 
    The foreign trade gap was 4.6 billion crowns ($184.2 
million) in March, compared with a 4.8 billion crown shortfall 
in March 2006, the Statistics Office said. 
    The market had forecast a 0.6 billion crown shortfall. 
    The February trade gap was 2.94 billion crowns, revised up 
from 2.05 billion crowns reported previously. 
    The Statistics Office gave no breakdown of the March data. 
    "Despite a disappointing start to this year, the trade 
balance will improve in coming months as KIA and PSA gradually 
increase their production," said Piotr Matys, an analyst at 
4Cast, referring to the new car assembly plants of French PSA 
Peugeot Citroen  and Kia Motors . 
    Analysts forecast the external deficit to narrow to about 30 
billion crowns in 2007, from 93 billion last year. 
    The crown weakened slightly after the March trade figures 
were released, to 33.670 per euro  from 33.610/650 
earlier in the session, traders said. 
    In a separate data release, the Statistics Office said April 
headline inflation was 0.2 percent on the month and 2.7 percent 
annually. 
    April inflation, calculated according to local methodology, 
was slightly above market predictions, but analysts did not 
expect an impact on monetary policy. 
    "We expect interest rates to stay unchanged in May, and we 
see a 25 basis points rate cut in the third quarter, depending 
on the crown's exchange rate," said Silvia Cechovicova, an 
analyst at CSOB Bank in Bratislava. 
  

[BRATISLAVA/Reuters/Finance.cz]