Analysts Do not Expect Quick War to Significantly Influence Economy
21. marca 2003

Market analysts do not expect the Iraqi war to have a significant impact on the Slovak economy. The war is not directly threatening the operation of main companies in the country and is not necessitating security measures that would reduce production, said Slovenska Sporitelna analyst Juraj Kotian. Slovakia’s exports are largely headed to the European Union (ERU) and Visegrad Group countries. „Since these are exports within the continent, they should not be paralyzed by airport security measures,“ he said.

The Iraqi war could first of all be reflected in oil price on the global market. This was gradually growing to fall to its quarterly minimum as a result of expectations of a brief war scenario and fast US victory. However, analysts pointed to the fact that oil price development could reverse and prices could skyrocket. „This would affect the development of the global economy,“ stated CSOB analyst Marek Gabris. A deceleration of economic growth of EU countries could also influence the Slovak economy cycle despite the fact that figures from the beginning of the year indicate resistance against EU development. „This is a consequence of higher DFI in the last couple of years, as well as the extension of capacities and new products,“ he explained.

A longer and costlier war scenario could influence the productivity of the Slovak economy, according to UniCredito Italiano analysts. They estimate a deceleration of GDP growth by 0.3 percentage points in such a case. Despite partial neutralization as a consequence of weakening of the US dollar, deceleration of export growth combined with the increasing share of oil in imports could lead to a decrease in net exports. In the event of a longer war, UniCredito Italiano analysts expect GDP growth in Slovakia at 3.4 percent, compared with 3.7 percent if the war was brief.

Changes in oil price, which along with gas represents 12 percent of Slovakia’s imports, would also be mirrored in consumer prices. However, these should be reflected in petrol prices to a lesser extent. „Fuel prices are largely comprised of excise taxes and other expenditures, which are not bound to oil price,“ said Mr. Kotian. He predicts petrol price would go up by SKK 10-12 if the oil price grew to USD 60 per barrel. „An immediate impact on inflation would thus be experienced of 1-1.5 percent and inflation would reach 9 percent,“ he added. UniBanka analyst Viliam Patoprsty estimates inflation at 8.5 percent in the event of a short war and 9.2 percent in the event of a longer variant.

UniCredito Italiano analysts expect the impact of a quick war on interest rates in Slovakia to be neutral, however, in the worst case scenario, inflation targeting in combination with a depreciating currency are expected to leave almost no room for the central bank to perform expected interest rate cuts.

Tento projekt je podporený z Európskeho sociálneho fondu


5. 3. 2021

USD 1,194 0,010
CZK 26,303 0,095
GBP 0,863 0,000
HUF 366,290 1,760
CAD 1,516 0,005