Summary of major economic happenings of the week
Monday, June 5
Inspectors in Slovakia Found 1,693 Illegal Workers in Last Year
The National Labor Inspectorate (NIP) uncovered 1.693 cases of illegal work last year. From the total number of illegal workers, 1,074 were employed by private individuals, and 538 worked for limited liability companies. "Companies in industrial manufacturing employed 279 illegal workers, while 430 worked illegally in the retail sector," reads the NIP report on situation in labor market protection and activities of state administration authorities in the area of labor inspection in 2005, which should be discussed by the cabinet soon. The inspectorate checked 44,578 people in total, focusing on employers with up to 49 employees.
Finance Ministry's Own Q1 Revenues Reached SKK 255.8 Mln.
Own revenues in the Finance Ministry's budgetary chapter reached SKK 255.8 million in three months of this year, meeting the plan for the whole year at 21.8 percent. Q1 revenues decreased by 7 percent y/y. As reads a report on the Finance Ministry's performance as of March 31, meeting revenues at the above level is adequate for the monitored period. The ministry expects meeting revenues to increase in the upcoming months due to growing State Treasury revenues.
Wienerberger Investments in Slovakia's Exceed SKK 1.4 Bln. So Far
The takeover, modernization, and making operational the three biggest brick making plants in Zlate Moravce, Boleraz and Ruzomberok has so far cost Wienerberger-Slovenske Tehelne, s.r.o. (WST) SKK 1.4 billion. "The world's biggest brick maker Wienerberger entered the Slovak market thirteen years ago. Currently it employs more than 180 people in three companies in Slovakia," said WST official representative Milos Klein.
Antitrust Office Takes More Time to Examine Airports Sale to TwoOne
The Slovak Antitrust Office (PMU), which is examining the concentration of the TwoOne consortium and the Bratislava and Kosice airports, extended the deadline to issue its decision. "Since this is a complicated case the office made use of an option granted by law and prolonged the deadline to issue a verdict on these cases until August 14," PMU spokesman Miroslav Jurkovic informed SITA. The Antitrust Office started to judge the concentration on March 14. The Austrian Antitrust Office already approved the concentration of TwoOne and the Bratislava airport.
Spissky Hrhov Prepared for Arrival of a Strategic Investor
An investment, considered by Vladimir Ledecky, the mayor of the village of Spissky Hrhov, to be the greatest in the Presov Region, is heading to the village. The local council already holds a land planning decision for a 130-hectare industrial park. A contract with a strategic investor, which should create about 1,100 jobs is already in the pipeline. "Ownership rights for land plots have already been settled. I believe that a decision will be made in a short period of time," said Mr. Ledecky. Now the whole project is on the table of the Slovak Investment and Trade Development Agency (SARIO), the Economy Ministry, and the Slovak cabinet, working on fine-tuning details with the investor. "From our side we have agreed on everything with the investor and everything is signed," added the mayor.
Tuesday, June 6
Industrial Output Growth to Slow Down, Following Record March
Results of a survey carried out by SITA news agency show market analysts expect year-on-year industrial output growth from 7.1 percent to 9.8 percent for April. This would mean a deceleration following a record 15.3 percent growth reported in March. "Despite this industrial output should retain an above-average growth rate, driven chiefly by the revitalization of transport means production," said UniBanka analyst Lubomir Korsnak. However, the anticipated deceleration of the year-on-year growth of industrial output is partly a consequence of the [comparative] base effect.
INVESTING: Pension Fund Assets at Almost SKK 16 Bln. Last Week
The net value of policyholders' assets in six licensed pension fund management companies in Slovakia (DSS) represented SKK 15.96 billion as of June 2. The value of assets in pension funds managed by six DSS increased by SKK 283.6 million week-on-week. Over SKK 10.38 billion was in growth funds, almost SKK 4.9 billion in balanced funds and SKK 681.7 million in conservative funds as of Friday, June 2.
WEDNESDAY, June 7
Construction Output Up 11.1 Percent y/y to SKK 10.4 Bln. in April
In April of this year the output of Slovak construction companies rose 11.1 percent y/y to SKK 10.4 billion. The April development resulted from higher output growth in new construction, modernization and reconstruction reporting an increase of 19.2 percent. For the first time this year output in maintenance and repair works dropped by 2.4 percent. The trend of considerable decreasing of construction output abroad continued over April. It shrank by 42.3 percent, the Slovak Statistics Office informed SITA.
Petrol Prices Down by SKK 0.42 as of June 1
As of June 1 the average retail price of 91- and 95-octane petrol in Slovakia was SKK 41.01 per liter and thus compared with May 19 it shrank by SKK 0.42. The Slovak Statistics Office reported that the price for the 98-octane petrol decreased by SKK 0.43 to SKK 43.62 per liter compared to May 19. The average retail price of one liter of diesel dropped SKK 0.62 to SKK 40.47. The average retail price of LPG fell by SKK 0.08 to SKK 22.23 as of June 1, spokeswoman of the Slovak Statistics Bureau Eva Kelemenova informed.
Car Sale Sector with Biggest Employment Growth in April
In April employment grew at the highest pace in the motor vehicle sale and maintenance sector that reported a y/y increase of 11.4 percent. According to the Slovak Statistics Office report the number of employees in the construction industry went up 10.4 percent, in hotels and restaurants by 8.3 percent. The increase accounted for 7.7 percent in the retail sector and 3.9 percent in the sector of real estate, rental, and other public services. On the other hand, employment continued decreasing in industry going down 2.4 percent y/y. Telecommunications services reported a 0.3 percent decrease in labor force. Postal services posted a drop of 0.5 percent and employment in the transport sector went down 0.6 percent y/y, for the first time this year.
Real Wages in March Grew Most in the Retail Sector
Average real wages in Slovakia posted a year-on-year growth in most monitored branches in the fourth month of this year according to preliminary figures of the Statistics Office. Compared to April 2005, average real wages in the retail sector were 6.7 percent higher. Average real wages grew 3.5 percent in the car sale and maintenance sector, 2 percent in real estate, rental, trade activities and other services and 1.6 percent in transport.
Wholesale Sector's Growth of Sales in Slows Down in April
Long-term significant growth of sales in Slovakia's wholesale sector slowed down in April. The wholesale sector sales grew 3.1 percent y/y in April in current prices to SKK 59.5 billion. The most significant sales growth was registered in household goods, going up by 12.7 percent and in machinery by 11.6 percent. Wholesale sales in non-farm semi-finished products rose by 11 percent and food, beverages and tobacco by 7.9 percent. Total growth was hampered by a drop in sales in primary farm products by 16.5 percent, wholesale mediation by 4.5 percent and other wholesale by 2.2 percent. Four-month sales of the wholesale sector increased by 10.5 percent y/y, the Slovak Statistics Office informed SITA on Wednesday.
Growth of Sales in Industry in Slovakia Decelerated in April
Industry sales growth in Slovakia decelerated in April. Sales in fixed prices went up by 4.1 percent y/y to SKK 138 billion. This development was largely influenced by a 4.9-percent increase in industrial manufacturing sales, while sales in the mining sector declined 9 percent and the drop in sales for electricity, natural gas and water production and distribution was 1.2 percent. Four-month sales in industry were 9.6 percent higher than a year ago. Of this, industrial manufacturing sales rose 11.9 percent y/y and sales in the mining industry grew 3.5 percent. Sales for electricity, natural gas and water production and distribution decreased 3.9 percent y/y, the Slovak Statistics Office informed SITA on Wednesday.
Simonstein & Henriks Confirms SKK 16 Bln. Investment in Slovakia
American financial group Simonstein & Henriks Corporation represented by consulting firm Akerman Advisory Association officially confirmed it plans to invest EUR 438 million in an industrial park in the eastern Slovak village of Spissky Hrhov in eastern Slovakia. Governmental trade and investment development agency SARIO spokesman Michal Novota said the group plans a green-field investment on a 100-hectare area. A robotized plant should manufacture products for the automotive industry and other branches. The US investment should directly create over 1,000 jobs. It is expected to considerably curb unemployment in a region with a jobless rate at over 15 percent.
State Aid Provided in Slovakia Last Year Totaled SKK 10 Bln.
The total volume of state aid granted in the Slovak Republic reached SKK 10.272 billion last year. In comparison with the previous year this translates into an increase by 12.03 percent, while the volume of state aid has been on the increase since 2002. The Finance Ministry writes in its report, approved by the cabinet on Wednesday, that SKK 5.333 billion or 51.92 percent of total sources provided was granted to sector aid. Moreover, SKK 3.894 billion was allocated for regional aid, SKK 740.48 million was allocated for horizontal aid and SKK 304.5 million to agriculture.
Johnson Controls to Get SKK 485.4 Mln. in Investment Stimuli
At its Wednesday meeting the cabinet decided to grant SKK 485.4 million in state aid to Johnson Controls Lucenec, s.r.o. founded by US firm Johnson Controls Holding Company Inc. From the total volume of the approved investment stimuli almost SKK 392.4 million will be provided in the form of tax relief for the company and the remaining SKK 93 million will be direct state aid. From the total direct state aid, a contribution to newly created jobs will account for SKK 68.2 million, while the remaining portion of SKK 24.8 million will be provided for training of employees.
THURSDAY,June 8
Real Wage Grew 3.1 Percent over Q1 2006
The Slovak Statistics Office reported on Thursday that the average monthly nominal wage in the Slovak economy increased by 7.5 percent to SKK 17,223 over the first quarter of this year. On the other hand, the real wage grew by 3.1 percent y/y. Employees in the financial intermediation sector had again the highest average monthly wage at SKK 40,207. Also the sector of production and transmission of electricity, gas and water reported wages higher than the average in the Slovak economy achieving SKK 25,374. The average real wages in real estate, rental, trade activities and other services sector achieved SKK 21,076 and SKK 19,098 in the public administration and defense sector.
Slovak Economy Grew 6.3 Percent in Real Prices over Q1 2006
Slovak economy showed high y/y growth dynamics also in the first quarter of this year. Country's gross domestic product (GDP) grew 6.3 percent in real prices over the first quarter of 2006 compared with the same period of the previous year. In the fourth quarter of last year Slovakia's economy posted a 7.6-percent growth. The revised estimate by the Statistics Office thus confirmed its flash estimate of the Q1 GDP growth in May.
Statistics Office Says Employment Up 3.7 Pct. in Slovakia in Q1
During the first quarter of 2006, 2.257 million people worked in Slovakia, which is an increase of 3.7 percent y/y. Of this number 1.961 people were employees, 215,200 were self-employed without employees, 72,200 businesspersons with employees and 1,000 members of entrepreneurs' households assisting in family businesses, the Slovak Statistics Office informed on Thursday.
Statistics Office Forecasts 2006 Economic Growth at 6.2 Percent
The Slovak Statistics Office has updated to 6.2 percent its forecast of Slovakia's economic growth for 2006 according to its latest estimates. Thus Slovakia's economy should generate this year gross domestic product (GDP) of SKK 1,604 billion. The Institute of Informatics and Statistics (Infostat) prognosticates for 2006 a bit slower economic growth of 6.1 percent. The Statistics Office expects that the average inflation rate would be 4.5 percent this year when it forecasts the December inflation rate at 4.2 percent. Infostat estimates the same average inflation, i.e. 4.5 percent, but it expects that the rate in December would be by 0.1 percentage point lower.
Statistics Office Says Inflation Shows No Downward Tendency Yet
The Statistic Office's latest economic outlook prognoses puts this year's average and end-year inflation in Slovakia several tenths of percentage points higher than the latest central bank prognoses from April. According to the Statistics Office estimates the average inflation rate in 2006 at 4.5 percent on a 4.2 percent y/y growth in consumer prices. On the other hand the central bank's last prediction sees the harmonized annual average inflation at 4.1 percent and the end-inflation at 3.7 percent. Statistics Office's Pavol Balaz said they had an advantage over of the central bank, as they also had data for one more month. This month indicates that inflation should not considerably drop but has the rather pro-growth tendency. Mr. Balaz argued that the development of prices in industry that will be sooner or later reflect in household consumption shows that prices rather accelerate than stabilize.
Economy Ministry to Subsidize Usage of Solar Energy and Biomass
The Economy Ministry suggests an SKK 100 million subsidies annually from next year for the usage of solar energy and biomass for heating and production of warm water. Subsidies should be provided to private persons for biomass boiler and solar system purchase up to 2015 follows from Slovakia's higher renewable energy resources usage strategy elaborated by the ministry. Subsidies will be granted after meeting certain criteria which the ministry will regulate in a directive. Should the estimated SKK 100 million not be drawn in a year, the remaining funds will be transferred to the next year, reads the strategy.
Slovakia Must Recover Illegal State Aid from Frucona with Interest
European Commissioner for Competition Neelie Kroes has decide that the write-off of tax debt of Frucona Kosice representing SKK 416.5 million constituted illegal state aid and was incompatible with the Single Market. The Commission has decided that Slovakia must recover the unlawful aid from Frucona with interest.
Friday, June 9
Slovakia's Foreign Trade Deficit was SKK 10.6 Bln. in April
Slovakia reported a preliminary foreign-trade deficit of SKK 10.557 billion in April. The April trade deficit was thus SKK 2.61 billion higher compared to April 2005. Exports rose by 10.3 percent y/y to SKK 87.955 billion. The volume of imports reached SKK 98.531 billion, up 12.3 percent y/y, the Statistics Office informed on Friday.
Slovakia Reports Revised Trade Deficit of SKK 4.3 Bln. in March
The Slovak Statistics Office revised the foreign trade deficit for March to SKK 4.3 billion. The trade gap thus lowered by SKK 2.8 billion compared to March 2005. Total exports rose 30.6 percent y/y in March to SKK 100.7 billion. Imports grew 24.8 percent to SKK 105 billion, according to revised data. The foreign trade deficit in the period from January until March reached SKK 23.4 billion, which is an increase by SKK 10.1 billion y/y. Goods for SKK 267.1 billion were exported from Slovakia over the first three months of this year, up 24.7 percent y/y. Goods for SKK 290.5 billion were imported to Slovakia over the first three months, up 27.8 percent.
Regulator Rules Slovak Telecom a Major Operator on Two Retail Markets
A verdict of the telecommunications market regulator, the Telecommunications Office, states that Slovak Telecom is a company with a significant influence on local and long-distance calls retail market for household and corporate customers through its fixed line network. The operator's position on the relevant retail market is such that it enables it to set call prices independent of the competition. This stems from a Telecommunications Office decision from June 5 and June 6. It imposed duties on the company with the aim of supporting effective competition and internal market development. "Slovak Telecom can appeal against this decision within fifteen days," said the spokesman for the Telecommunications Office, Roman Vavro.
First Quarter Construction Output in Slovakia Up 13.5 Pct. y/y
Output in the construction sector in Slovakia grew by 13.5 percent year-on-year in the first quarter of 2006. This was the fourth highest growth in the European Union after Estonia (23.8 percent), Lithuania (22.2 percent) and Latvia (17.3 percent). However, compared with Q4 2005 Slovak construction output stagnated.
Slovakia's FOREX Reserves Rose to USD 19.4279 Bln. this Week
Slovakia's foreign exchange (FOREX) reserves grew over the past week, going up by USD 476.3 million to USD 19.4279 billion as of June 7. Behind this drop is an increase in commercial banks' reserves, increasing by USD 522.9 million to USD 2.1403 billion while the central bank's reserves fell by USD 46.6 million to USD 17.2876 billion, announced the NBS press department on Friday.
Analysts Expect y/y Headline Inflation to Reach 4.7% to 4.8% in May
Bank analysts expect the year-on-year growth of consumer prices in May to accelerate to 4.7 to 4.8 percent. The Statistics Office will publish May inflation data on Monday. Slovenska sporitelna bank analyst Michal Musak said the expected acceleration is due to rising petrol prices. Moreover, the rise in excise taxes in January will also influence inflation as stockpiles of cheaper cigarettes are running short. Mr. Musak expects inflation will remain at the predicted level in the coming months and should only start decreasing in September or October.
Supreme Court Turns Down Sudzucker's Appeal Against PMU Decision
The Supreme Court in Slovakia has delivered its verdict to the Antitrust Office (PMU) turning down an appeal by German company Sudzucker AG against the PMU decision banning Sudzucker's concentration with French company Saint-Louis Sucre, S.A. The Supreme Court Appeals Senate thus confirmed the previous verdict in which the court turned down an appeal and thus confirmed the Antitrust Office's appellate body, the PMU Council, decision from 2004. The aforementioned concentration was banned because it would create a joint dominant position of Sudzucker AG and Union des Sucreries at Destilleries Agricoles (Union SDA), France on the relevant sugar production market and consumption production sales and also on the sugar production market and final consumption sales in Slovakia, announced PMU spokesman Miroslav Jurkovic.