Slovakia predicts economic boost from booming car sector

BRATISLAVA, Feb 4 (Reuters) - Slovakia's expanding car

sector will help to push the central European country's economic

growth in the coming years to levels last seen before the global

financial crisis, the Finance Ministry said on Thursday.

The country of 5.4 million is home to three car plants and

is expecting a fourth to come online in 2018 after the

government signed a deal with Jaguar Land Rover (JLR)

last year for a 1.4 billion euro ($1.6 billion)

factory that is expected to boost foreign investment and

Slovakian exports.

In an updated outlook on Thursday, the ministry said that

strong domestic demand and investments will support growth this

year despite the weak external environment.

After estimated growth of 3.6 percent last year, the

ministry expects the economy to expand by 3.2 percent in 2016

before accelerating to 3.6 percent in 2017 and then by more than

4 percent as new assembly lines begin operations in 2018/19.

Finance Minister Peter Kazimir said the car sector is

bringing new suppliers and investments that are creating jobs.

"These are the reasons why our economy is returning to the

2005-2007 levels," he told a news conference.

Slovakia achieved growth of 6-10 percent over the four years

before the 2009 global downturn.

The country, which last year made more than 1 million cars,

exports most of its output and its focus on smaller, cheaper

vehicles has helped it to weather the post-crisis years.

Investment in the sector is increasing, however.

German carmaker Volkswagen (Other OTC: VLKAF - news) is expected to invest

a total of 800 million euros in two separate projects this year.

Slovakia is also home to Kia and Peugeot Citroen

.

The ministry said that new investments in the car sector

will add 30,000 new jobs this year, representing a welcome boost

for a country with an unemployment rate of 10.6 percent in

December.

"Investment by JLR and Volkswagen will help to accelerate

economic growth and employment," Kazimir said.

($1 = 0.8949 euros)

(Reporting by Tatiana Jancarikova; Editing by David Goodman)