Skip navigation
Newswire

UPDATE 2-Slovak c/a swings to surplus on car boom

(Adds analyst quote, details)

By Michael Winfrey

BRATISLAVA, Jan 28 (Reuters) - Slovakia's current account balance swung to a surplus at the end of November due to a car-led export boom that has significantly shrunk the once problematic trade deficit.

The surplus, Slovakia's first since 1995, was a cumulative 0.5 billion ($15.4 million) crowns in the first 11 months, the central bank said on Wednesday, a huge improvement over the 73.8 billion crown deficit in the same period in 2002.

In the month of November alone, the balance showed a one billion crown surplus.

"In a phrase, it's car exports," said Commerzbank analyst Radomir Jac. "It's a new psychological level, a surplus not only on the monthly figures, but also on the cumulative basis."

The bank also revised downward its January-October current account data to show a deficit of 0.5 billion crowns, from an originally reported 0.9 billion crown gap.

Analysts say the improving external balance shows that the strong crown is not affecting exporters' competitiveness, although the central bank is trying to keep down market enthusiasm that it says is driving the currency higher too fast.

CAR SALES BLOSSOM

Slovakia's blossoming car manufacturing industry spearheaded the dramatic turnaround that has cut the trade gap to a mere fraction of its levels in previous years.

The foreign trade shortfall from January to November shrank to 10.9 billion crowns, or around one eighth of the deficit in the same period in 2002.

Volkswagen is the backbone of the push. Its plant outside Bratislava produces 280,000 cars a year, makes up around 20 percent of exports and is Slovakia's only fully-functioning car plant.

The factory made a sweeping switch to producing more value-added cars, like its four-wheel drive Touareg model, last year, from a previous focus on more economical models.

The rest of the country's car industry is made up of a rapidly growing network of plants supplying Volkswagen and other carmakers in the region with tyres, windshields and other parts.

But France's PSA Peugeot Citroen will open a 300,000 car per year plant in western Slovakia in 2006.South Korean carmaker Hyundai Motor is also scheduled to choose between Slovakia and Poland as the site of a 1.1 billion euro plant next month.

($1=32.52 Slovak crowns)