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Report on Economic Development in September 2010 - Summary

The year-on-year inflation rate of the euro area measured by the harmonised index of consumer prices (HICP) was 1.8 % in September (1.6 % in August). The euro exchange rate against the US dollar appreciated during September. At its October meeting, the ECB Governing Council decided that the main refinancing rate would stay at 1.00% and that interest rates on the marginal lending facility and the deposit facility would also remain unchanged, at 1.75 % and 0.25%, respectively.

In Hungary, the annual HICP inflation rate in September was a largely unchanged 3.7%. Meanwhile, in the Czech Republic and Poland the price level compared to the same period last year accelerated to 1.8 % and 2.5 %, respectively. The strengthening of the Czech koruna, Polish złoty and Hungarian forint against the euro continued also in September. The key interest rates in the Czech Republic, Poland and Hungary remained unchanged.

In Slovakia, the month-month HICP inflation rate in September remained unchanged at 1.1 %. In the year-on-year comparison, energy prices in September decelerated owing to a decrease in the year-on-year dynamics of fuel prices. By contrast, a moderate year-on-year rise was recorded in food prices and in prices of services and non-energy industrial goods. The prices of industrial products and raw materials went up year-on-year, while water and sewerage rates decelerated and the decrease in energy prices slightly slowed. Prices of agricultural products increased significantly in August when compared to the previous month while construction prices remained unchanged.

The balance of the current account in August deteriorated in comparison with the previous month. The higher current account deficit resulted from the larger deficits in the trade balance and balance of income. Improvements in the balance of services and current transfers balance had a positive impact on the overall balance of the current account.

The year-on-year dynamics of the industrial production index slightly slowed in August owing to the base effect. In spite of the deceleration, the majority of sectors maintained a pro-growth trend. In construction production the year-on-year decline in August eased in comparison with the previous month. The year-on-year rise in total revenues accelerated in August, mainly as a result of positive developments in revenues from wholesale, construction and car sales. The overall indicator of economic sentiment decreased in September compared to the previous month. The negative trend in the indicator reflected a decline in confidence in the industry and services sectors and among consumers. In month-on-month terms, the confidence indicator improved in construction and to a more modest extent also in the retail sector.

The year-on-year growth in nominal and real wages increased in August in comparison with the previous month. Accelerated growth was recorded in almost all industrial sectors except for transport and storage, wholesale trade, and restaurant and food services. The average year-on-year decline in employment for selected sectors further ameliorated also in August. A slower decrease was recorded in almost every sector except for selected market services. The rate of registered unemployment slightly decreased in August in month-on-month terms, to stand at 12.2 %.

As to the development of deposits in August, positive year-on-year dynamics were maintained both in deposits of non-financial corporations and in household deposits. In both sectors, growth was reported mainly in demand deposits, while in the sector of non-financial corporations, term deposits of up to two years also increased. The growth of demand deposits was a main factor influencing the development of the M3 monetary aggregate in August. The volume of loans to non-financial corporations increased in August compared to the previous month, mainly owing to the increased economic activities and improved financial situation of non-financial corporations. Loans to other financial intermediaries decreased substantially. Loans to households reported a slight year-on-year growth in August. Housing loans have had the most marked influence on the development of loans to households. Lending rates for non-financial corporations stagnated in August. Interest rates on household loans did not change significantly, while rates on consumer loans mainly increased. As for loans to sole traders, interest rates on operating loans increased more markedly. Within both sectors, customer interest rates on deposits did not change significantly in August.

Petra Pauerová
Spokesperson of the 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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