Slovakia: We expect the growth rate to reach 3.6% y/y
From Slovak data, the flash GDP growth for the 1Q will be probably the most watched indicator. We expect the growth rate to reach 3.6% y/y, the similar level as was seen in 4Q10. The market on average expects slightly lower rate, at 3.3% y/y. Only the flash growth rate will be released, the structure will be known with a one month delay. We assume that the quarterly seasonally-adjusted real GDP growth rate reached 0.8%, similar rate as was seen in the past seven quarters. Economy continued to be driven by foreign demand, industrial production and investments, in our view. We expect household consumption to have increased only modestly, as the unemployment rate still remained high (in March, it reached 13.1% according to labor offices, actually slightly higher than 12.9% seen in March 2010). The beginning of the year was affected by public sector layoffs, being part of fiscal consolidation, and less favorable season. With both factors likely to ease in the following months, we expect gradual fall in the unemployment rate in the months to come.
Ahead of the GDP data, March industrial production is going to be released; we expect growth rate at around 9.5% y/y. The March foreign trade should post bigger surplus than in the previous month, we expect surplus of around EUR 112mn.
Consumer inflation has stabilized in April, in our view, after steep increase in the first quarter of 2011 (driven by fiscal measures, higher energy and food prices). We expect national CPI to stagnate at 3.6% y/y and harmonized inflation stable at 3.8% y/y in April.
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