- Slovakia’s fourth-quarter GDP fell 2.7% compared with the same period a year ago, reaching €16,498.2 million, according to a flash estimate by the Slovak Statistics Office. 2009 GDP slipped 4.7% year-on-year, according to the report.
- Slovakia’s Finance Ministry revised upwards its 2010 GDP growth forecast to 2.8% from the 1.9% it expected in autumn 2009.
- Unemployment is growing increasingly critical. Slovakia’s joblessness stood at 13.6% in December, three points higher than Hungary, which has the second-highest unemployment in the CEE region (see chart below).
Analysis and Forecast: Inreasing Risk
As Political Capital forecast in Most Significant Risk Factors that Could Hinder Economic Recovery in Slovakia in November 2009: “The jobless rate is likely to keep growing in the next few months and might hit the 14% in spring 2010. It will be up to the new government to tackle this problem.” This prognosis seemed radical at the time, considering that unemployment was less than 12% in September. It is now clear that we were underestimating the situation. Though Slovakia’s fourth-quarter GDP declined much more slowly than in the third quarter, when it dropped 4.9%, the jobless rate shows that the economy is far from recovery. Unemployment may even hit 15%.
In this context, the Finance Ministry’s improved GDP forecast looks like a campaign stunt. Smer has yet to divulge its plans on how to create jobs after its probable election victory. Without a strategy to increase the role of knowledge-intensive industries in the economy, Slovakia is running a risk of enduringly high unemployment.