Slovak May trade shows surplus but outlook darkens

                                
 * May trade balance surprise on upside
                                
 * High oil prices, weaker foreign demand key risks
                                
 By Martin Santa
                                
 BRATISLAVA, July 11 (Reuters) - Slovakia's foreign trade
balance posted a surprise surplus in May, data showed on Friday,
but analysts said further improvement would depend on world oil
prices and foreign demand.
                                
 Foreign trade balance showed a 4.1 billion crown ($213.4
million) surplus, compared with a revised deficit of 6.8 billion
in April, the Statistics Office said [ID:nL11601173].
                                
 Foreign trade, key for economic growth in central Europe has
remained strong, data from Hungary [ID:nBUD002499] and Czech
Republic [ID:nL0448023] showed in the past days, but analysts
say the flagging western European eocnomy and surging currencies
would take their toll in the coming months.
                                
  "The general outlook for trade balance in our view looks
less positive," said Piotr Matys, analyst with 4Cast in London.
                                
 "We've expected exports growth to be fuelled by car
manufacturing, but we see downside risk for demand for new cars
across Europe as economies are slowing down," added Matys.
                                
 Industrial output growth slowed in May as production in the
country's dominating car and machinery sector lagged
expectations, data showed on Tuesday, but analysts said it
should pick up again next month [ID:nL08349448].
                                
 High oil prices -- U.S. crude <CLc1> rose $1.18 to $142.82 a
barrel early on Friday after jumping $5.60 on Thursday on
geopolitical and supply fear -- were negatively influencing
trade balance since the beginning of the year.
                                
 "Oil prices deliver a monthly burden of five billion crowns
on imports," said Juraj Valachy, analyst with Tatra Banka.
                                
 "The import side of the trade balance was negatively
affected by high oil prices in the first four months of the year
as oil prices surged even when the crown appreciation is taken
into account," said Maria Valachyova, Slovenska Sporitelna
senior analyst.
                                
 The Statistics Office said overall imports of energy goods,
as well as imports for the electronics sector, fell on the month
in May.
                                
 U.S. crude prices rose by 96.8 percent on the year in May,
trading at $143.45 a barrel as of 0825 GMT, while the crown
firmed by 24.3 percent on the year against the dollar, trading
at 19.170 <SKK=> against the greenback as of 0825 GMT.
                                
The crown currency has been driven, in the past few months,
by market expectations of a strong conversion rate against the
euro when entering the single currency area next January. The
final switchover rate was set at 30.1260 per euro on Tuesday.
                                
 The car sector, centred on assembly plants of Volkswagen
<VOWG.DE>, PSA Peugeot Citroen <PEUP.PA> and Kia Motors Corp.
<000270.KS>, and electronics giants Sony <6758.T> and Samsung
Electronics <005930.KS> are Slovakia's economic backbone.
                                
 (Editing by Victoria Main)