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NBS Monthly Bulletin, February 2012 - Summary

The annual rate of euro area inflation, as measured by the Harmonised Index of Consumer Prices, was 2.7% in January according to Eurostat’s flash estimate. The euro area’s gross domestic product for the fourth quarter of 201l grew by 0.7% in year-on-year terms and by 0.3% when measured against the previous quarter, according to Eurostat’s flash estimate (by comparison, GDP for the third quarter rose by 1.3% on a year-on-year basis and by 0.1% quarter-on-quarter). The exchange rate of the euro against the US dollar appreciated during January in comparison with the previous month. At its meeting on 9 February 2012, the ECB’s Governing Council decided to leave the key ECB interest rates unchanged, with the main refinancing rate standing at 1.00%, the marginal lending rate at 1.75% and the deposit rate at 0.25%.

The annual rate of change in the HICP inflation rate in December accelerated in both the Czech Republic and Hungary, to 3.8% and 5.6 %, respectively. The data for Poland had not yet been published when this Bulletin was compiled. In the Czech Republic, GDP for the fourth quarter grew by 1.5% year-on-year (compared to a rise of 1.3 % in the third quarter), and in Hungary it increased by 1.5% (the same as in the third quarter), according to Eurostat’s flash estimate. The data for Poland were unavailable. The exchange rates of the Czech koruna, Polish zloty and Hungarian forint appreciated in January in comparison with the previous month. None of the central banks of these central European countries adjusted their monetary-policy settings in January; Česká národní banka left its key rate at 0.75%, Narodowy Bank Polski at 4.50%, and the Magyar Nemzeti Bank at 7.00%.

As at the cut-off date, January HICP inflation data for Slovakia had not yet been published. The inflation rate as measured by the consumer price index (CPI) fell month-on-month in January, to 3.9%. The slowdown in price level growth stemmed from the expected fading away of the effects of indirect tax changes and from a decline in the annual rate of change in administered prices, fuel prices and food prices. Looking at industrial producer price inflation, its annual rate of change in December declined in comparison with November, mainly due to lower inflation in energy prices as well as in manufacturing producer prices. Construction work prices also rose more slowly in December, while prices of agricultural products recorded a sharper annual decline.

Slovakia’s gross domestic product for the fourth quarter of 2011 (seasonally unadjusted and measured at constant prices) increased by 3.4% year-on-year, according to the SO SR’s flash estimate (by comparison, it grew by 3.0% in the third quarter). In quarter-on-quarter terms, seasonally adjusted GDP rose by 0.9% (compared to a rise of 0.9% in the third quarter). Overall employment in the fourth quarter increased year-on-year by 0.9% (after rising by 1.7% in the third quarter), while measured against the previous quarter it remained unchanged (compared to a rise of 0.2% in the third quarter). Although GDP growth in the fourth quarter exceeded NBS expectations, the labour market situation was less positive.

The balance of payments current account went from a surplus in November to a deficit in December, due mainly to a decline in the trade balance surplus. The income balance, too, showed a moderate deterioration in comparison with the previous month. The downward pressure on the current account balance was to some extent mitigated by an improvement in the services balance. Turning to the industrial production index, its annual rate of change increased only slightly in December, with the upturn in manufacturing industry being partially offset by a decline electricity and gas supply. Among the main segments of manufacturing industry, the largest declines in production were recorded by manufacture of transport equipment, manufacture of computer, technological and optical products, and manufacture of machinery and equipment. Construction production recorded a relatively sharp increase in December, after decreasing in the previous month. As for sales in selected sectors, their annual rate of change maintained a downward trend in December, reflecting mainly subdued sales in the industry sector and the sale and maintenance of motor vehicles sector. The overall economic sentiment indicator in January increased month-on-month and declined year-on-year. Confidence indicators in the industry and retail trade sectors improved, as did the consumer confidence indicator. On the other hand, confidence in the construction and services sectors deteriorated.

The annual rate of growth in the average nominal wage was lower in December than in the previous month. This slowdown was largely attributable to slower wage growth in the industry and construction sectors. On the other hand, nominal wages in the transport and storage sector and the information and communications sector increased at a slightly faster pace. The annual rate of growth in employment rose moderately in December in comparison with the previous month. The sectors recording the most marked rises in employment were industry and selected market services. The rate of registered unemployment increased month-on-month in December, to stand at 13.6%.

In the area of private sector deposits, the stock of deposits from both non-financial corporations and households increased in December in comparison with the previous month. As non-financial corporations shifted funds from less liquid deposits to current accounts, the most pronounced increase was in the amount of demand deposits. In year-on-terms, however, the stock of deposits from non-financial corporations declined. Deposits from households increased month-on-month across all maturities; the most marked rise was in deposits with an agreed maturity of over two years, which offered attractive remuneration. The annual rate of change in the stock of household deposits remained positive and largely unchanged. As for lending to the private sector, the stock of loans to households increased month-on-month in December while loans to non-financial corporations declined. In the household sector, the sharpest growth was in housing loans. Corporate loans of all maturities declined in comparison with the previous month; the most pronounced drop was in the stock of loans with a maturity of between 1 and 5 years. In a sign that the credit expansion is continuing, the annual rate of change in lending to both sectors was positive. The stock of loans to non-financial corporations increased year-on-year despite declining in month-on-month terms. Lending rates did not change significantly in December and lending conditions were, on the whole, relatively favourable. While bank deposit rates for non-financial corporations declined moderately, those for households increased slightly.

Petra Pauerová
hovorkyňa NBS

National Bank of Slovakia
Press and Editorial Section
Imricha Karvasa 1, 813 25 Bratislava, Slovak Republic
Tel.: +421-2-5787 2142, +421-2-5865 2142, +421-2-5787 2169, +421-2-5865 2169

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