Analysts: Foreign Trade Surplus in June Highest Since September 2014

(Stock photo by TASR)

Bratislava, August 9 (TASR) – Slovakia’s foreign trade surplus continued to swell in June, with exports exceeding imports by around €515 million – the highest monthly surplus since September 2014, UniCredit Bank Czech Republic and Slovakia analyst Lubomir Korsnak told TASR on Tuesday.

“We’ve seen a reversal in developments in foreign trade surpluses in recent months. While surpluses were gradually shrinking last year and at the beginning of this year, this trend was reversed in the second quarter – in line with expectations – with surpluses growing again: from 3.9 percent of GDP in March to 4.3 percent in June,” noted Korsnak.

These developments were driven to a considerable extent by revivals in foreign markets, mainly the European one, which has helped to boost Slovak exports, but also investment imports stimulated by EU funds.

Meanwhile, the summer months usually bring a slight reduction in economic activities in industry, resulting in lower output and reduced foreign trade surpluses. “Setting this seasonal fluctuation aside, we expect the 12-month accumulated foreign trade surplus to continue to grow gradually, eventually stabilising at around 4.5-4.7 percent [of GDP],” said the analyst.

At the same time imports are expected to be boosted by growing household consumption and recovering private investments, but this growth should now be fully offset by rising exports stimulated by a cyclical revival in European economies.

“The possible negative effects of the British referendum [on EU membership] most likely won’t appear before the end of the year, while sentiment indicators have so far been suggesting that the negative effect of Brexit on the continental economy needn’t be significant. Foreign trade surpluses are expected to be moderated on a temporary basis next year, held back by technology imports, mainly related to large investments in the automotive industry,” said Korsnak.

“Slovakia’s economy should develop favourably, with a slight growth correction following the dynamic GDP growth last year – driven by the late drawing of EU funds from the previous period – expected to continue. Domestic demand should remain the main workhorse, but revived foreign trade in net figures [exports minus imports] could have a slight positive contribution towards [overall economic] growth,” said Slovenska sporitelna bank analyst Katarina Muchova.

The Statistics Office reported earlier in the day that Slovakia’s foreign trade produced a surplus of €515.4 million in June 2016, which was €92.4 million higher than the surplus recorded in June 2015.

Total exports amounted to €6.109 billion in June, which represented an increase of 2.1 percent year-on-year, while imports also rose – by 0.6 percent to €5.593 billion.

Meanwhile, the first six months of 2016 saw foreign trade generate a surplus of €2.308 billion, which was €129 million higher than the surplus posted for the same period of 2015. Total exports rose by 3.5 percent y-o-y to €34.668 billion, while total imports grew by 3.4 percent to €32.359 billion.