Summary of economic news released on Thursday, December 7
Statistics Office Confirms 9.8 % Economic Growth in Q3
In the third quarter of this year Slovakia's economy grew 9.8 percent in real prices, what means an increase by 3.1 percentage points when compared with Q2. Thus the Statistics Office confirmed its flash estimate from November. Slovak economy generated a gross domestic product of SKK 424.9 billion representing a nominal growth of 13.9 percent.
Statistics Office Forecasts 2006 Economic Growth at 7.7 Percent
The Slovak Statistics Office has updated to 7.7 percent its forecast of Slovakia's economic growth for 2006 according to its latest estimates. Based on the high Q3 growth the Statistics Office increased its prognosis of this year's economic growth from a year ago by 1.2 percentage points. Thus Slovakia's economy should generate this year gross domestic product (GDP) of SKK 1,634 billion. The Institute of Informatics and Statistics (Infostat) prognosticates the same growth for 2006. The Statistics Office prognosticates Q1 2007 economic growth at 7.2 percent. Infostat's estimate is however 0.1 percentage points higher.
HPI: Budget Reserve not Enough for Higher Health-Insurance Payments
Civic association Health Policy Institute (HPI) thinks that Finance Minister Jan Pociatek makes misleading and irresponsible statements. It hinted at the minister's statements on higher health-insurance payments that the state pays for its policyholders. After parliament approved the increase for the first four months of next year minister Pociatek said that if the government decides to continue paying more for it policyholders also after April the funds would be taken from the budgetary reserve. According to HPI the reserve of the state budget is not more than SKK 1 billion. However to continue payments at 5 percent of the average wage after April would require more than SKK 4 billion. Thus, HPI urges the minister to take an unambiguous stance regarding the sum and schedule of payments for state's policyholders next year.
Statistics Office Reports 12.8% Unemployment in Q3 2006
The jobless rate in Slovakia continued its downwards trend over the third quarter of this year when it dropped to its eight-year low. The number of unemployed fell 73,400 y/y to 341,600. The unemployment rate decreased 2.8 percentage points to 12.8 percent, which is the lowest level since Q4 1998, said the Statistics Office.
Real Wages in Slovakia Grew 2.7 Percent in the Third Quarter
Slovakia's Statistics Office reported on Thursday that the average nominal monthly wage was SKK 18,212 in the third quarter of this year, which is up 7.7 percent y/y. Real wages grew 2.7 percent. Employees in the financial intermediation sector continued to have the highest average monthly wage at SKK 33,480. Several sectors reported a higher monthly wage than the average. The average monthly wage in the sector for production and transmission of electricity, gas, and water was SKK 27,498. In the public administration and defense sector it was SKK 22,327; in real estate and rental activities it was SKK 23,050; in raw-materials extraction it was SKK 19,973; in telecommunications, postal services, and transport it was SKK 19,650; and in industrial production it was SKK 18,402.
Tatra Banka to Float EUR 30 Mln. Mortgage-Backed Bond
Tatra Banka is preparing to float a new issue of mortgage-backed bonds amounting to EUR 30 million. The par value of bonds will be EUR 1 million. The bank plans to launch the new issue on December 13 to finance mortgages while the bank has set the period of issuance only for one day. The bonds will bear a flexible coupon equaling three-month EURIBOR plus 0.16 percent p.a. Interest will be paid quarterly. The mortgage-backed bonds will mature on December 13, 2007, according to data published by Tatra Banka.
PSA Peugeot Citroen Ends Mass Recruitment for Trnava Plant
French carmaker PSA Peugeot Citroen's Trnava car plant has already concluded mass recruitment of employees for its plant in Trnava. Head of the PSA Trnava communication department Peter Svec said they do not need more people because the number of employees stabilized at about 3,000, which correspondents with company's momentary needs. He dismissed rumors that the company has definitively stopped hiring new people. He said that at in early December they got over thirty new employees, He hinted that they are going to hire more staff in the future but recruitment will have another form. It will reflect the real need that will depend on the market success of the company's products.
VUB Banka Floats EUR 600 Mln. Mortgage-Backed Bond
VUB Banka, a.s. announced on Thursday its plans to float a new issue of mortgage-backed bonds of EUR 600 million to finance mortgage lending. The bank will float the issue on December 14 and December 15. The par value of the security is SKK 1 million. Bonds will bear a fixed interest rate at 4.6 percent p.a. The bonds mature on December 14, 2009, after which date they will bear no interest rate.
Limitations Passed on Switching a Pension Fund Management Company
When a client of a licensed pension-fund management company (DSS) will want to change DSS as of January 1, 2007, he or she will have to pay SKK 500 to the social security provider Socialna Poistovna. This stems from a revision to the old-age pension saving law, which the Slovak Parliament adopted on Thursday. A client will pay the SKK 500 fee for a so-called acceptance letter. This document will confirm that at least two years have lapsed from the inscription of the first contract of the client about the pension saving into the register of Socialna Poistovna or that at least two years have lapsed from the move into another licensed pension-fund management company.
Lesaffre Slovensko Earns 2005 Profit of SKK 7.5 Mln.
Lesaffre Slovensko, a.s., a company specializing in sale of mixtures for the baking industry and yeast for bakeries and retailers, closed last year with a taxed profit of SKK 7.5 million. This represents a significant improvement, since the taxed profit in 2004 was SKK 941,000. Sales of goods amounted to SKK 135.2 million, while costs related to sales reached SKK 106.6 million. The trade margin was SKK 28.6 million. The firm generated added value of SKK 10.9 million.
Turnover of Siemens, s.r.o. Went up 12.7 Pct. to SKK 6.443 Bln.
Siemens, s.r.o., which is the main representative of Siemens concern in Slovakia, reached a turnover of SKK 6.443 billion in the business year of 2005/2006. The business year 2005/2006 started on October 1 of last year and ended on September 30 of this year. Siemens director general and representative of Siemens in Slovakia Peter Kollarik said that turnover of Siemens, s.r.o. increased by 12.7 percent y/y. Successful integration of the company VA TECH EKIN EBG into the organizational structures of Siemens, s.r.o. positively influenced total economic results. Exports of Siemens, s.r.o. reached SKK 197.1 million and capital investments amounted to SKK 57.4 million. As of the end of September Siemens, s.r.o. employed 550 people, up 31 percent y/y.
Socialna Poistovna's Five-Member Board Replaced by One Executive
The current five-member board of directors of social insurance provider Socialna Poistovna will be replaced by a single director general next year. This is based on the parliament-approved draft revision to the retirement pension-saving law, which concurrently amends the social insurance law. Socialna Poistovna's director general will be elected and recalled by the Cabinet and his or her term will be six years. The monthly wage of Socialna Poistovna's director general will equal six-times the average monthly wage in Slovakia. Annual budget of Socialna Poistovna is the range of SKK 115 billion.
Kia Launches Production in Slovakia, Plans to Boost Engine Output
The carmaker Kia Motors Slovakia plans to extend its annual engine production from 300,000 to 600,000 pieces. The Kia plant in Zilina should supply a Hyundai car assembly plant to be built in the neighboring Czech Republic. Kia inaugurated a new Zilina plant on Thursday and started serial production. Kia Motors Slovakia spokesman Dusan Dvorak said that they should start extending the capacity of the engine plant already next year. Kia is considering either building a new engine plant or extending the existing one. Engine production should run at full capacity in 2012. Reuters cited Kia Motors Slovakia president In-Kyu Bae as saying that "In the first or second quarter of next year, we will start building a new engine factory in Zilina. It should start operating at the end of 2008." However he could not elaborate on the expected cost of the new factory.
OTP Banka Plans to Float SKK 500 Mln. Issue of Mortgage-Backed Bonds
OTP Banka Slovensko, a.s. plans to float the tenth issue of mortgage-backed bonds amounting to SKK 500 million on December 14, 2006. Par value of the two-year bond will be SKK 1 million. Bonds will bear a flexible coupon equaling three-month BRIBOR plus 0.07 percent p.a. and the bank will pay it quarterly. Bonds will mature on December 14, 2008, informed OTP Banka.
Motor Fuel Prices Dropped as of December 1
As of December 1, the average retail price of 95-octane petrol decreased SKK 0.20 to SKK 36.35 per liter compared with November 20, the Slovak Statistics Office reported. The average retail price of 98-octane petrol was SKK 38.92 per liter, down SKK 0.20. The average retail price of one liter of diesel was SKK 37.68, down SKK 0.30. The average retail price of LPG dropped SKK 0.03 as well to SKK 21.67, spokeswoman for the Slovak Statistics Office Eva Kelemenova informed on Wednesday.
SDKU Asks for Extra SKK 200 Mln. in Child Benefits in the Budget
During the parliamentary debate on the next year's state budget, deputy Iveta Radicova from the Slovak Democratic and Christian Union-Democratic Party (SDKU-DS) proposed increasing the volume of funds to be paid in child benefits by SKK 200 million, which should secure the finances for the valorization of these benefits. She suggests that this amount be taken from the General Treasury Administration chapter to the detriment of the valorization of wages of public sector employees. "The government's intention is to reduce the number of employees in public administration," stated Ms. Radicova.
MONEY MARKET: Moderate Liquidity Surplus Persists
The interbank market trading was quiet on Thursday. UniBanka dealer Jozef Hempfinger commented that only the shortest deposits were traded. There is a slight liquidity surplus of around SKK 2 billion now on the interbank market, which banks failed to drain off on Thursday. Commercial banks deposited SKK 25.387 billion in their reserve accounts in the National Bank of Slovakia (NBS), meeting the minimum requirement for December on a cumulative basis at 81.08 percent. There were no overnight contracts with the central bank.
STOCK MARKET: SAX Index Stays at 411.98 Points on Thursday
The value of Slovakia 's official SAX share index did not change on Thursday, and it stayed at 411.98 points. Turnover on the Bratislava Stock Exchange (BCPB) rose from SKK 909.8 million on Wednesday to SKK 1.377 billion on Thursday with SKK 14.927 million in share trading.
Minister Presents Her Vision of Changes to the Pension Scheme
Reacting to deputies' questions during parliamentary question time on Thursday, Labor Minister Viera Tomanova presented her plan to make the second pension pillar voluntary for young people who entered labor market as of July of next year. "Every citizen who already entered the capitalization pension scheme or should enter the second pillar will have a possibility to decide whether he or she remains only in the first pillar," said Mrs. Tomanova.
FOREX MARKET: Crown Moves in Narrow Band against Euro on Thursday
The exchange rate of the Slovak crown against the euro moved in a narrow band on Thursday. The local currency touched the current record level but it did not report a new high against the euro. Tatra Banka dealer Milan Cavojec stated that the crown opened at 35.440/35.460 SKK/EUR, but it did not climb above 35.500 SKK/EUR. "No opening of new positions from foreign banks was reported on the market, which also relates to the approaching end of the year," Mr. Cavojec commented.