Comments on: Slovakia Takes The Biscuit – GDP Drops 11.2% In Three Months

By: Marcin S

Marcin S — Wed, 20 May 2009 22:42:46 +0000

Probably the credit bubble was bigger in Hungary or Latvia. Nevertheless, some argue Poland or Slovakia are crisis proof. Judging by demographics and economic model, each East European country is headed into negative territory.

By: Antonio

Antonio — Tue, 19 May 2009 12:53:26 +0000

With regard to Slovakia and EMU, I think you’re absolutely right Edward. As I understand it, there was essentially a tacit agreement with the energy companies that rises in oil/gas prices wouldn’t be passed on to consumers – if you look at the relationship between wholesale gas/oil prices and the energy component of the CPI basket, it breaks down around mid-2007. The bigger picture is that, while inflation was previously the largest barrier to EMU entry, now it will be meeting the fiscal criteria. I don’t think people have woken up to the likely impact the recession will have on tax receipts and the deficits.

By: Robert

Robert — Mon, 18 May 2009 20:50:40 +0000

Thanks Edward, when everybody was partying in Bratislvava in January I could see that the orders for vehicles had stopped in Western Europe. Yet everybody in Slovakia seemed so far behind the curve on what was about to happen. Good point about the heavy reliance on very expensive 4X4′s.

My company has a factory in Slovakia that have completely priced themselves out of the market. Spain, Ireland, Slovakia, Greece, Portugal, maybe the “Euro” is not such a good idea after all.

By: tg

tg — Mon, 18 May 2009 09:39:00 +0000

G Cox

“Cut everyone’s pay by say 5% to adjust for the excessive exchange rate level at which they went in.”

The currency of the surrounding countries like Hungary, Poland, Chech Republic devalued 20-40% against the euro compared with the highs August last year. 5% wage cut is just not enough. If the crises will continue for years, Slovakia will be in a big trouble. In addition I do not think wage cuts are possible.

By: G Cox

G Cox — Mon, 18 May 2009 09:04:14 +0000

PS Superb report by the way. Deserves a better name than a ‘blog’.

By: G Cox

G Cox — Mon, 18 May 2009 08:08:37 +0000

Simple or only solution. Cut everyone’s pay by say 5% to adjust for the excessive exchange rate level at which they went in.

‘caveat ingressus’

By: tg

tg — Sun, 17 May 2009 22:51:21 +0000

“which may well not be seasonally corrected, so I am evidently not suggesting they were dropping at a 44.8% rate in the quarter, which would obviously be ridiculous”

OK. Perhaps after seasonally adjustment the annualized drop will be -40%.

-40% GDP for a eurozone country!

Why can’t we see it on CNN, CNBC?
Why it is not a headline in Europe?