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By Mike Caggeso
Slovakia's economy grew at an impressive 9.4% clip – or $21.5 billion – during the third quarter, driven largely by its surging manufacturing sector, the Statistical Office of the Slovak Republic announced yesterday [Tuesday]. Employment also rose 2.1%.
The government attributed most of the growth to the "manufacturing of machinery, electrical and transport equipment. From the expenditure side, the gross domestic product [GDP] growth was influenced mainly by the ongoing foreign demand and permanent growth of domestic demand." Two of the big foreign manufacturers in Slovakia are carmakers PSA Peugeot Citroen SA of France, and Kia Motors Corp., of South Korea.
These fresh statistics dovetail nicely with last quarter's economic figures – GDP growth of 9.4% and employment growth of 2%.
Such growth cements Slovakia's case to join the Euro Zone in 2009. To gain admission, Slovakia must meet the financial standards [a maximum inflation rate, as well as standards for state spending and interest rates] of the Maastricht Treaty, though one of the main cases against its admission is the nation's inflation growth.
According to the EU, Slovakia would need to keep its average 12-month inflation rate within the average of three EU countries with the slowest growth, plus 1.5 percentage points. Additionally, the country would also have to keep its budget deficit within 3% of its GDP.
The European Commission said Friday that Slovakia is on target to meet those standards,. But that's not a guarantee, either.
"Under unchanged policies, for 2009 we estimate 3% [inflation growth]. So the question of sustainability should be carefully considered when we write our report next spring," EU Economic and Monetary Affairs Commissioner Joaquin Almunia told Reuters, refering to a report on Slovakia's economic progress due in May.
And because all this vague talk of a Euro Zone probability just isn't as concrete as we'd prefer, two non-government Slovak organizations went as far as calculating specific odds the country will adopt the euro in 2009.
As of now, the INEKO organization and Club of Economic Analysts give the country a 71% chance of adopting the euro based on the government-approved state budget for 2008, which also meets euro adoption criteria.
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The Maastricht Treaty.