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Czech recession persists as Slovakia expands

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(Globalpost/GlobalPost)

First-quarter data showed the Czech Republic firmly stuck in the longest recession in memory while smaller neighbour Slovakia saw an uptick in output, official data in both EU states showed Wednesday.

Both ex-communist states, which formed Czechoslovakia until splitting peacefully in 1993, are heavily dependent on car production and exports mainly to the crisis-hit eurozone.

Bratislava joined the European single currency in 2009 but Prague insists it will wait until its ongoing debt woes have been resolved.

The Czech economy contracted by a seasonally-adjusted 0.8 percent in January-March against the last quarter of 2012, and by 1.9 percent on an annual basis.

This was Prague's sixth straight quarterly contraction which analysts here blame on slumping exports to the debt-laden eurozone.

"The recession in the Czech economy is not approaching its end, but rather is peaking," Petr Dufek, an analyst at the Prague-based CSOB bank, said Wednesday.

Overall in 2012, it contracted by 1.2 percent. The Czech central bank is predicting an 0.5-percent contraction this year before a pick-up to 1.8-percent growth in 2014.

Meanwhile, Slovakia saw Q1 output expand by a seasonally-adjusted 0.3 percent compared with 0.1-percent growth in Q4 of last year, an official estimate said Wednesday.

Driven by car and electronics production, the export-dependent economy posted 2.0-percent growth last year, a stellar performance in the crisis-struck single currency bloc.

The finance ministry has forecast a 1.2 percent expansion this year, while the central bank is more cautious with an 0.7-percent estimate for this year.

"The first half of 2013 in particular will be a harder period for Slovak industry and economy as a whole which will be affected by lower demand from abroad and weaker domestic consumption," Postova banka analyst Eva Sadovska said Wednesday, predicting an uptick later this year and in early 2014.

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http://www.globalpost.com/dispatch/news/afp/130515/czech-recession-persists-slovakia-expands