Slovak Sept industry growth slows, seen picking up

BRATISLAVA, Nov 8 (Reuters) - Slovak industrial output rose 9.7 percent in September from a year ago, its slowest pace since April, data showed on Wednesday, but analysts said growth should gather speed again soon with rising car production.

Car output is key to cutting Slovakia's wide current account deficit which, at 8.6 percent of gross domestic product, was the largest in central Europe last year.

The market expected industrial production to grow 12.7 percent on an annual basis in September, below a 14.3 percent rise in August.

"On the first sight, the figures look worse ... but (last month's) were inflated a bit by a low base in car production in August last year," said Tatra Banka analyst Juraj Valachy.

Car output growth plunged to 26.2 percent in September from 70.9 percent in the previous month. Analysts said August's figures were boosted by holidays and line-refitting in Volkswagen Slovakia <VOWG.DE> last year.

"Production in PSA (Peugeot Citroen) should accelerate in coming months, meaning growth rates could be above 50 percent in October and November in vehicle production," Valachy said.

The flourishing car sector, long dominated by Germany's Volkswagen, is a key engine of the EU member's booming economy, which is seen growing at nearly 7 percent this year.

Total car output is expected to shot up to over 800,000 units by 2009 from some 218,000 made by Volkswagen's plant last year, after new plants by France's PSA Peugeot Citroen <PEUP.PA> and South Korea's Kia Motors <000270.KS> come fully onstream.

The central bank (NBS) predicts Slovakia's current account deficit will fall to 6.7 percent of GDP this year and 4.3 percent in 2007 due to higher car exports.

Expectations of an improving external balance have boosted the crown currency, which firmed to a record high of 36.001 per euro <EURSKK=> on Wednesday.

"The expectation of an improving trade gap is the reason to be still medium and long-term bullish on the Slovak currency despite the fact it is at an all-time high," said Miroslav Plojhar, chief economist at Citibank in Prague.

The crown has outperformed its regional peers this year, gaining 4.8 percent against the euro. ((Reporting by Martin Dokoupil, editing by Mike Peacock; Reuters Messaging: martin.dokoupil.reuters.com@reuters.net; +421 5341 8402))

Keywords: ECONOMY SLOVAKIA INDUSTRY