SK: Auto Sector Boosts Industry and Trade in March

In March, industrial production increased year-on-year by 3.5%. This is the first year-on-year increase in 2025. On a month-on-month basis (compared to February 2025), after adjusting for seasonal effects, industrial production rose by 0.7%. The key contributor to the March turnaround was the automotive industry, which grew by 20.6%. On the contrary, the most significant slowdown was seen in electricity and gas supply (-15.6% y/y) as well as in machinery production (-15.7% y/y), according to data from the Statistical Office of the Slovak Republic.

In the first quarter of 2025, industrial production declined by 0.9% year-on-year. On a quarterly basis, the most significant positive contribution came from a 15% increase in the production of transport equipment. On the other hand, the main factor in the decline came from metal production, which posted a year-on-year decline of more than 10% in the first three months of 2025. Industrial performance was also slowed by an almost 14% drop in the supply of electricity, gas, steam, and cold air, and a nearly 16% decline in the production of machinery and equipment.

Foreign trade in March ended with the highest surplus in the past nine months. Both exports (+11.3%) and imports (+13.1%) grew at double-digit rates year-on-year, with the trade balance reaching nearly EUR 407 million. A rise in car exports contributed to the positive balance. Preliminary data for the first quarter show that exports increased by 5.5% compared to the same period in 2024. Imports rose by 11.2% y/y. The trade balance recorded a surplus of EUR 379 million. On the other hand, in the same period of 2024, the surplus was almost EUR 1.7 billion.

Better foreign trade and industrial production results in March were supported by efforts of manufacturers and exporters, especially in the automotive industry, to take advantage of the period before the introduction of 25% tariffs, which came into effect in April. Confidence in the industrial sector remains volatile, and sentiment both now and in the coming months will be influenced by uncertainty in the economic and geopolitical environment, which naturally leads to more volatile outcomes. Demand-side challenges persist. A key factor for the recovery of industrial activity will be the rebound of the European economy, led by Germany, which could help stabilize demand conditions. As a small and open economy, Slovakia is particularly sensitive to the risks of trade wars. Demand-side pressures persist due to the slower recovery in consumption, which is linked to overall economic uncertainty. A positive impulse could come from the continued gradual easing of ECB monetary policy, as lower rates are gradually feeding into the economy.