(Adds fresh analyst comments, broader context)
By Martin Santa
BRATISLAVA, April 9 (Reuters) - Slovakia's industrial output fell more than expected in February and stayed near 10-year lows, data showed on Thursday, strengthening expectations of the country's first ever economic recession this year.
An unexpected foreign trade surplus for February offered little relief as it pointed to weakening activity in industries depending on materials and parts from abroad.
Slovak data highlighted the scale of the impact of the global downturn on younger European Union states where industries suffer from weak demand in the West and several governments face public unrest amid budget cuts, rising unemployment and tumbling currencies. The Slovak Statistics Office said industrial output fell by 28.2 percent year-on-year in February, compared with a market forecast of an 18.5 percent decline.
The reading was slightly better than the revised annual fall of 30.9 percent in January, which was the worst result since 1999 when the current data series began.
"The reason is still the same - recession in Slovakia's main trading partners is bringing a dramatic decline in demand for Slovak products," said CSOB Bank analyst Silvia Cechovicova.
"A further fall in orders by more than 38 percent for January signals that the situation will not change significantly in the coming months," she said.
Slovakia, which adopted the euro in January, has not had to bail out any of its banks, but the economy has suffered from weakening demand for its key exports, mainly cars and TV sets.
Output data showed car industry production fell an annual 44.4 percent in February, while the category of electronics and optical goods was down 12.5 percent.
DOWNTURN SPREADS ON
Separate Slovak data showed a February foreign trade surplus of 84.3 million euro, versus forecasts of a 180 million deficit.
The trade figure, however, does not signal rebounding economic activity as it reflects slowing output in industries whose production relies on imports, said Tatra Banka analyst Juraj Valachy.
The trade statistics showed exports falling 31.0 percent, less than imports which were down 32.7 percent on the year.
The ex-communist EU members in central and eastern Europe have been hit hard by the global crisis and the region is braced for a sharp economic slowdown with many states predicting recession.
On Thursday, Hungary's central bank deputy governor Julia Kiraly said the recession would be deeper than previously expected. The bank sees contraction of 3.5 percent this year, but has warned of downside risks.
The Czech monetary authority predicts negative growth of up to 2 percent in 2009, while the Slovak central bank said on Tuesday it forecast the economy to shrink by 2.4 percent this year, the country's first annual contraction ever.
"Trends in industry clearly show that new risks to full-year economic performance could still emerge on the downside and the debate about the depth of the recession in Slovakia is probably not over yet," said ING Bank analyst Eduard Hagara. (Writing by Peter Laca; editing by Stephen Nisbet)