Slovak Oct trade gap shrinks, crown at record high

    Slovakia's foreign trade gap 
narrowed in October, preliminary data showed on Tuesday, and 
analysts expect the improvement in the external balance to 
continue due to rising output by the automotive industry. 
    The Statistics Office said the trade deficit reached 4.98 
billion crowns ($185.7 million) in October, down from a revised  
9.87 billion crowns in September. 
    It was also below the 6.761 billion crowns of October last 
year. The data helped the crown rise to a new record high versus 
the euro. 
    The October trade gap was bigger than the market forecast of 
4.1 billion crowns. But analysts said annual export growth of 
27.4 percent showed the positive trends in the economy and may 
signal the long-awaited turnaround in the external balance. 
    "Despite expectations of a slightly smaller deficit the 
trade deficit has narrowed on the year and I think this could be 
the turning point and the improving trend will continue in next 
months," said Tatra Banka analyst Juraj Valachy. 
    Slovakia's foreign trade balance has deteriorated in the 
past year due mainly to imports of equipment for investment 
projects such as car plants being built by France's PSA Peugeot 
Citroen  and South Korea's Kia Motors Corp. 
. 
    But the new assembly plants and the new plants being built 
nearby by car part makers are expected to boost output next year 
and further raise exports. 
    Analysts expect Slovakia's external balance to narrow next 
year to around half of the 78.4 billion crowns predicted by the 
central bank for 2006. 
    A positive trade outlook has been one of the reasons behind 
firming of the crown, which hit an all-time high of 34.990 to 
the euro  at mid-morning on Tuesday and has gained 7.4 
percent against the single currency this year. 
    "Market participants have their eye on improvements and we'd 
expect a continuation of the improving trend started this month 
to add to the positive crown momentum," said 4cast analyst 
Francesca Beausang-Hunter. 
 ((Writing by Martin Santa and Peter Laca, Reuters Messaging: 
martin.santa.reuters.com@reuters.net; Email: 
martin.santa@reuters.com; +421-2-5341-8402)) 
 ($1=28.25 Slovak Crown) 
  Keywords: SLOVAKIA TRADE/ 
    

[BRATISLAVA/Reuters/Finance.cz]