Slovakia's car-reliant economy slows sharply as trade wanes

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An employee works on a Porsche vehicle at a production line of Volkswagen plant in Bratislava, Slovakia, July 4, 2019. -Reuters

BRATISLAVA - Slovakia's economy, dominated by car manufacturing, slowed unexpectedly in the second quarter when it expanded by 1.9% year-on-year, down from a 3.7% rise in the first quarter and missing analysts' expectations of 3.3% growth. The quarterly, seasonally adjusted growth of 0.4% given by the statistics office on Wednesday also missed analysts' expectation of a 0.7% expansion - buffeted by turbulence in the global economy and a shrinking Germany economy. "Slovakia is feeling the impact of the global slowdown and the economic stagnation in Germany, our biggest trade partner," VUB Bank analyst Michal Lehuta said. "Slovakia's unexpected slowdown in the second quarter was due to the slowdown in industrial output, falling net exports and weak household consumption." Slovakia's data has been the biggest disappointment in central Europe as Hungary, Poland and the Czech Republic all posted strong growth, albeit slowing down from first quarter. Slovakia's industrial output dropped 2.1% year-on-year in June, the first contraction since March 2018 and the lowest level since April 2017, statistics office said last week. Car manufacturing at factories run by Volkswagen , Peugeot , Kia and Jaguar Land Rover fell for the first time in 18 months in June, dropping by 7.6%. The country's central bank said a partial shutdown at oil refiner Slovnaft MOLB.BU in May and June and output cuts at United States Steel Corp's Slovak factory as the steel industry struggles across Europe have also contributed to slower growth. Statisticians will release the full breakdown of the Slovak data, including household consumption, on Sept. 6. A slump in exports sent Germany's economy into reverse in the second quarter, data showed on Wednesday, as its manufacturers bore the brunt of a global slowdown amplified by tariff conflicts and uncertainty over Brexit. -Reuters


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