The National Bank of Slovakia (NBS) says that Slovakia’s February trade deficit will be below expectations. The Slovak Statistics Office will public the foreign trade figures for the second month of 2003 on Friday. The central bank maintains that positive development on the export and import side had particularly influenced the trade deficit in February.

Analysts expect an improved February trade balance compared to February 2002, but their estimates on the monthly deficit vary significantly. While the most optimistic estimate is from banking house CSOB, expecting the February trade deficit at SKK 2 billion, Slavia Capital analyst Pavol Ondriska predicts a monthly trade deficit of SKK 5.3 billion. Compared to the SKK 6.33 billion deficit in February 2002, this would still mean an improvement.

With regards to positive foreign trade expectations, the NBS Bank Board considers key interest rates as suitable and decided on Thursday to keep them unchanged. This means that the one-day sterilization repo rate remains at 5.0 percent p.a. and one-day refinancing rate is 8.0 percent p.a. The two-week sterilization repo rate is at 6.5 percent p.a.

According to the central bank, current development in Slovakia’s economy indicates continuing recovery. The development of consumer prices, determined in particular by abating administrative interference from the start of the year, was also in line with its expectations. Changes in some regulated prices and continuing secondary effects of administrative interference into price development will still influence consumer prices over the next few months. These factors should, according to the NBS, moderately increase year-on-year growth dynamics in headline as well as core inflation. Among risks for consumer price development the central bank includes the current international political situation and related movements of crude oil prices.