BRATISLAVA, March 9 (Reuters) - Slovakia's depressed car sector dragged industrial output to the worst result in a decade in January, data showed on Monday, and analysts said the euro zone newcomer could see its economy shrink in the first quarter.
Slovakia's industrial output fell by 27 percent year-on-year in January, the worst reading since the current data series began in 1999, compared with an 18 percent decline in December and worse than a market prediction of a 24.4 percent fall.
"The global crisis is the key factor, and also the gas crisis played a role in January," said Tatra Banka analyst Juraj Valachy. A two-week halt in Russian gas supplies forced some 1,000 companies to cut or stop production in January.
"The car sector decline was the key contributor, but this is not just about car makers -- the crisis is spreading across all sectors," Valachy said.
Slovakia's automotive sector, centered around assembly plants of Volkswagen, PSA Peugeot Citroen and Kia Motors Corp, showed an annual production fall of 47.7 percent in January, compared with a 44.6 percent decline in December.
The three car makers have a combined output capacity of around 900,000 units a year.
They assembled 587,400 cars last year, but the car makers told the government last month their output could fall by as much as 25 percent in 2009 as consumers curtail spending because of the financial crisis.
Slovakia's small and open economy has avoided a direct impact on its banks from the financial turmoil, but it is now feeling the effect of the crisis as demand for its goods, mainly cars and television sets, weakens in key export markets.
Slovak gross domestic product growth slowed to 6.4 percent in 2008, from a record high 10.4 percent a year earlier, and the government expects a further slowdown to 2.4 percent in 2009.
But analysts said economic data suggested the government's forecast might be too optimistic.
"We will see bad results in the coming months as well, there is no reason for optimism. We now expect that the first quarter annual GDP data will be in negative territory," said CSOB Bank analyst Silvia Cechovicova. (Reporting by Martin Santa; editing by Stephen Nisbet)