Slovak Q2 GDP revised up to near record growth

...but analysts said the expansion was unlikely to prompt a near-term tightening of central bank policy.

The Statistics Office said on Tuesday that gross domestic product (GDP) rose by a real 9.4 percent year-on-year in April-June, up from the flash estimate of a 9.2 percent rise made by the Office in August.

Growth, one of the fastest rates in the European Union, was just under the record 9.6 percent in final three months of 2006. GDP rose a real 9.0 percent in the first quarter of 2007.

"Final household consumption and net exports were the key drivers of growth," said Maria Valachyova, senior analyst at Slovenska Sporitelna in Bratislava.

"Household consumption was slightly higher than expected. This was a slight surprise," she said.

Domestic demand, which is rising after years of belt-tightening reforms, was up 7.3 percent on the year, compared with 6.5 percent growth in the previous three months.

Analysts said investment growth remained strong although it decelerated to 6.3 percent in April-June, from 7.7 percent in the first quarter.

Growth in exports continued to outpace that in imports with both weakening slightly in the second quarter.

"Household consumption is very strong. This would halt any discussions about an interest rate reduction even if we were not going into the euro zone," said Juraj Valachy, analyst at Tatra Banka.

"Overall growth is very balanced and did not show any reason for changes in interest rate settings. We will wait for the ECB (European Central Bank), and if the ECB goes above 4.25 percent the central bank will go up (tighten policy) as well, he said."

The NBS, which aims to bring Slovakia into the euro zone in 2009, kept the key two week repo rate unchanged at 4.25 percent, 25 basis points over the ECB benchmark, last week.