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Gross domestic product in the 4th quarter of 2020

Gross domestic product in the 4th quarter of 2020

Last update: 05.03.2021
Ilustratívny obrázok/Illustrative image
Publisher: Headquarters Bratislava
Topic: Macroeconomic statistics
Domain: National accounts
Publish Date: 05.03.2021

In 2020, gross domestic product of the Slovak Republic decreased by 5,2 %, at the end of the year, the economy was pulled by exports and by the decline of the selected sectors

The slump in the economy in the 4th quarter, was the second most moderate in 2020, reaching only 2,7 %, the growth of the value added in various groups, especially in industry in the last month of the year dampened the unfavourable trend from the first half of the year.

Gross domestic product (GDP) of the Slovak Republic decreased by 2,7 % year-on-year in the 4th quarter of 2020 (at constant prices, seasonally adjusted). While the first wave of the Covid-19 pandemic caused historic slumps in key indicators in the second quarter, development at the end of the year, were already influenced by the second wave. The economy was able to restart and at the end of the year, thus the drop was the second most moderate during the entire year of 2020. The foreign demand also played a decisive share of the result again, which was able to kick-start so much that it achieved year-on-year growth by1,8 %.

Compared with the 3rd quarter, GDP production was actually higher by 0,2 %, after seasonal adjustment.

In current prices, GDP amounted to EUR 24,1 billion, which is by 0,4 % lower than GDP in the 4th quarter of 2019.

Ilustračný obrázok - graf

According to the ESA 2010 methodology, GDP is quantified in three ways. Given the available sources of information, the production method is decisive for Slovakia.

Production method

Gross value added as a determining component of GDP was actually lower year-on-year by 2,8 % in the 4th quarter of 2020. Activity in individual sectors has been affected to varying degrees by the pandemic, some of them have recorded growth again after a downturn in the previous quarters, such as industry, in some of them, the decline has deepened slightly again or, after growth, they have recorded a fall again at the end of the year.  

The most significant year-on-year decrease in value added was recorded in construction by 13,8 %, but it should be noted that the sector increased quarter-on-quarter. The double-digit year-on-year decline was still reflected in wholesale, retail trade; transportation and storage; in accommodation and food service activities by 10,4 % and after a considerable growth in the second and third quarter the financial services dropped by 10,3 %. A decrease was recorded also in information and communication activities by 8,5 %, in arts, entertainment and recreation; other service activities by 7,3 %. The collection of net taxes on products recorded a decrease by 1,7 %, year-on-year.

In the 4th quarter, the growth of the value added was reported in industry by 2,7 %, in public administration; education; health and social care by 2,5 %, in real estate activities by 1,9 %. After three quarters, a positive growth trend was also reflected in professional, scientific and technical activities by 0,3 %.

In industry, which represents a significant component of GDP, an increase in the value added was recorded in various groups, such as electricity, gas, steam and air-conditioning supply by 12 %, in manufacture of motor vehicles by more than 6 %. However, some groups related to the manufacture of motor vehicles showed a decrease in value added, e.g. manufacture of basic metals by more than 5 %, manufacture of rubber and plastic products by more than 7 %. In the field of these services, a considerable, more than 9 % growth was recorded in wholesale and with regard to the pandemic, the expected negative development was confirmed, in travel agency activities, where gross value added was only 28 % compared to last year, meaning a decrease by 72 %.

Expenditure method

Although economic activity did not reach pre-pandemic levels in the 4th quarter of 2020, some of the expenditure components recorded an improvement of the development. The economic downturn was also moderated by foreign demand (especially in the automotive sector) also in this quarter, which, after a relaunching achieved a year-on-year growth by 1,8 % for the second quarter in a row, even higher than in the previous quarter.

Imports of goods and services experienced a positive change, exceeding last year's level by 0,6 %. The external trade balance (goods and services) thus amounted to more than EUR 315 million.

On the contrary, domestic demand recovers more slowly from the corona crisis, but with a year-on-year decrease by 3,8 %, its recovery can be seen (in the 3rd quarter there was a decrease by 8,1 %).

The fluctuating investment activity has had a decisive impact on its decline. The decrease in gross capital formation was more modest, by 13,1 %, however, the decrease in gross fixed capital formation deepened by 15,4 %. After two quarters, final consumption expenditure in the public sector returned to the positive values by 0,1 %, though the total final consumption expenditure decreased by 1,5 % due to a decrease in household final consumption expenditure by 2,4 %.

Income method

As for he generated GDP 1), the remuneration of employees 2) was more than EUR 11 billion. Compared to the 4th quarter of 2020, their volume increased by 1,6 %. Gross operating surplus and mixed income in the amount of more than EUR 10,3 billion fell by 2,7 %. The volume of collected taxes collected on production and imports increased by 0,4 % to more than EUR 3 billion. The value of subsidies was higher by 2,3 % and reached EUR 339,4 million. 

GDP in 2020

In the 1st up to 4th quarter of 2020, the nominal volume of the generated GDP reached more than EUR 91,1 billion, which represents a year-on-year decrease by 2,9 % at current prices.  At constant prices, it dropped by 5,2 %, when compared with the financial crisis in 2009, the drop was deeper by 5,5 %.

Illustration image - Graph

In total, the economic sectors generated EUR 81,5 billion of gross value added in all four quarters, it dropped by 5,4 % year-on-year. Compared to 2019, all the major sectors recorded a decrease, however, a double-digit drop was achieved by construction, by more than 20 % and by the manufacture of motor vehicles by 18 %. Value added in arts, entertainment and recreation; other service activities was lower by 9,6 %, in wholesale, retail trade; transportation and storage; accommodation and food service activities by 6,8 %, in information and communication by 5,3 %. The collection of net taxes on products was lower by 3,5 % year-on-year. The positive development was maintained by the group of food, beverages and tobacco by 5,7 %, the real estate group by 1,6 % and the group of financial and insurance services by 9,3 %.

In terms of expenditure components, all the main components for 2020 showed negative values. Despite the growth in the second half of the year, foreign demand remained lower by 7,2 % year-on-year. Domestic demand decreased by 6,4 % due to a decrease in gross capital formation by 22,4 % (of which gross fixed capital formation decreased by 11,9 %). The total consumption dropped by 1,4 %.


Note: ESA 2010 methodology; unless otherwise stated, absolute values and structure are at current prices, data on year-on-year development are calculated from constant prices by chain procedure of volumes to the reference year 2015
1) absolute values and data on year-on-year development are at current prices
2) remunerations of employees (residents or non-residents) are paid off by residential employers
p.p. percentage point 

Source: SOSR, DATAcube (nu0002qs, nu0003qs, nu0004qs, nu0005qs, nu0006qs)

 

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