Slovak industry growth hits 39-mth low, outlook dim

...Santa
                                
 Slovak industrial output
rose at the slowest pace in more than three years in August,
data showed on Wednesday, as the financial crisis hurts foreign
demand for goods produced by the future euro zone country.
                                
 Analysts said August production data signalled a less
optimistic outlook for overall economic activity.
                                
 Real industrial production was up 0.9 percent on the year in
August, the smallest increase since May 2005, the Statistics
Office said. It was well below market forecast of a 7.2 percent
rise and also a slowdown from 1.9 percent growth seen in July.
                                
 "This was a broad-based decline in the industrial
production," said Maria Valachyova, a senior analyst at
Slovenska Sporitelna, the Slovak unit of Erste Bank.
                                
 "Output in several sectors came below our expectations,
probably because of smaller demand from the euro zone."
                                
 Manufacturing production, which has the strongest weighting
in the index, rose by 0.4 percent on the year in August, its
smallest rise since March 2005, compared with an 8.6 percent
increase in July.
                                
 Like several other ex-communist central European nations,
Slovakia does not expect a direct hit from the financial crisis
on its banks, but the small and open economy is exposed to an
indirect impact if demand weakens in its main trading partners.
                                
 Slowing industrial output signalled a difficult time ahead
for the wider economy, analysts said.
 "We expected industrial production growth of around 6
percent in the coming months, but we might lower the forecast,"
Valachyova said. "There are negative implications for foreign
trade and gross domestic product growth as well."
                                
 Slovakia's economy relies heavily on exports of cars and
electronics goods. Production in the car industry rose 16.7
percent from a year ago, after 27.6 percent growth in July.
                                
 Electronics and optical equipment showed a 1.8 percent
annual rise in August, compared with 9.2 percent growth in July.
                                
 The government has kept its forecast of 7.7 percent gross
domestic product growth for this year, which is expected to be
one of the highest rates in the EU, but it has warned of
downside risks stemming from the global financial crisis.
 For Aug industrial output details see [ID:nL8642202]
 (Editing by Toby Chopra)


[BRATISLAVA/Reuters/Finance.cz]