Bratislava, February 28 (TASR) – The outbreak of coronavirus might have an impact on the Slovak economy, which is closely tied to developments in Germany, and could carry over into 1Q20 stats, think economic analysts.
Analysts of the social-insurer Slovenska Sporitelna expect the Slovak economy to grow at 2 percent this year, a less sanguine revision from the previous prognosis of 2.2 percent. “Due to economic impacts of the new coronavirus on the global economy, we postpone the improved outlook and keep the GDP growth estimates at 2 percent,” said analyst Katarina Muchova, adding that impacts of the coronavirus on the Slovak economy are likely to hover in the neighbourhood of 0.2-0.3 percentage points.
Any precise estimates on the illness pose a great challenge at this early stage, as it’s not clear how individual countries will address the problem and how long its effects will last. If severe measures are introduced, concomitant with higher rates of uncertainty that might influence the behaviour of people, the negative effect could ratchet up to 0.7 percentage point. “At the moment, we consider this to be a low probability scenario,” added Muchova.
The slowdown of the Chinese economy is not prognosed to pose any significant ramifications for Slovakia, as direct trade ties are low. “Only about 6 percent of all Slovak imports originate from China, whereas Slovak exports to China make up slightly more than 2 percent of all exports,” claimed Muchova.
However, more important for Slovakia is the response of the German economy, which is linked to that of China to a significantly higher extent. Germany is the main trade partner for Slovakia and thus secondary effects might translate also into the Slovak economy.
Equally important are also expectations harboured by consumers and firms. “Their pessimistic expectations might have a pronounced effect on consumption and investments,” claimed Muchova, adding that tourism could also take a hit.
“The automobile industry, the driving force of the Slovak economy, is unlikely to be affected, as key suppliers are based in the Central European region and imports of components from China are low,” added Muchova.