June 19, 2018 / 2:17 PM / a month ago

Slovak GDP growth forecast to accelerate on booming car output

* Government, central bank slightly trim 2018 GDP forecasts

* But they predict growth to pick up next year

* Jaguar and Volkswagen production plans to help economy

* U.S. tariffs expected to have little effect on growth

BRATISLAVA, June 19 (Reuters) - Slovakia’s economic growth will accelerate to over four percent next year on strong domestic demand and a booming car sector, the finance ministry and central bank forecast on Tuesday.

In separate outlooks, the ministry and central bank predicted growth would recover to 4.5 and 4.8 percent respectively next year, adding that import tariffs imposed or proposed in the United States would have little effect.

However, the central bank described the economy’s performance in the first quarter - when GDP rose 3.6 percent year-on-year - as “somewhat disappointing”. As a result, the ministry and bank trimmed their 2018 outlooks slightly to 4.1 and 4.0 percent respectively.

The ministry noted that British-based Jaguar Land Rover will move all production of its Discovery model to its 1.4 billion euro ($1.62 billion) plant in Slovakia.[ Germany’s Volkswagen has similar plans for the country.

“Growth will be driven mostly by exports from Jaguar Land Rover’s plant that should go online later this year, and the launch of new SUV models at the Volkswagen plant,” it said.

Slovakia, which has a population of 5.4 million, produces more than one million cars a year. This means the country, which is also home to plants run by Kia and Peugeot , has the highest per capita car production in the world.

President Donald Trump’s imposition of tariffs on steel and aluminum imports and possible tariffs on cars made in the European Union will have little impact on Slovakia, shaving between 0.03 and 0.11 percentage points off the economic growth, the ministry said.

Most cars produced in Slovakia are exported to other EU countries.

Domestic demand will be fuelled by low unemployment and real-wage growth of 3.3 percent next year that will also drive inflation to 2.3 percent in 2019, the ministry said.

After peaking in 2019, Slovak economic growth will slow slightly to 3.9 and 4.0 percent in 2020, the ministry and the bank forecast respectively. ($1 = 0.8660 euros) (Reporting by Tatiana Jancarikova; editing by David Stamp)

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