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UPDATE 1-Slovak GDP slows but still beats region

Published 11/14/2008, 05:33 AM

(Refiles to fix garble in headline tag)

BRATISLAVA, Nov 14 (Reuters) - Slovakia's economy grew at its slowest pace in almost three years in the third quarter but remained the regional leader and one of the fastest growing among European Union members.

The economy grew by a real 7.1 percent year-on-year in the three months to September, exactly matching analysts' forecast in a Reuters poll and slowing down from 7.6 percent in the second quarter, the Slovak Statistics Office said on Friday [ID:nLE351147]

Growth in the neighbouring Czech Republic beat market expectations by picking up to 4.7 percent year-on-year [ID:nLE20852]. Both countries outpaced regional laggard Hungary which reported 0.8 percent growth [ID:nLD170721].

"We expect net exports and household consumption to be among the drivers," said Maria Valachyova, senior analyst at Slovenska Sporitelna. "We expect economic growth to slow in the fourth quarter due to a high annual base effect."

Slovakia, due to join the euro zone in January, has been boosted by car, electronics industries and solid household consumption in the past few years, booking record growth of 10.4 percent last year.

Slovak banks have not felt the direct impact of the global financial crisis, but the country will be affected by weaker demand for its goods in its main export markets in the West.

"There will be a more significant slowdown next year due to a negative external environment," said Valachyova "We expect a smaller rise in investment due to the financial crisis, but Slovakia's economy should still remain among the European Union's fastest growing".

Analysts saw the economy growing by 7.1 percent in full-year 2008, slowing to 4.8 percent next year. (Reporting by Peter Laca and Martin Santa; editing by Chris Pizzey)

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