The Slovak economy is likely to grow at 4% this year, says the OECD, predicting faster expansion than either the country's government, its central bank or the EU.

The OECD says growth is likely to slow from more than 7% in 2008 and the blistering rate of 10.4% seen in 2007, but the 4% is considerably higher growth than other countries in the region.

The Organization for Economic Cooperation and Development believes Slovakia will do better than many of its neighbours because it has adopted the euro, which will partly protect the economy. Many CEE countries are now seeing their currencies fall sharply.

Even so, the economy's dependence on exports , especially car manufacturing, will slow expansion.

"The euro will partially shelter the economy against disturbances from the currency markets," the OECD said.

"As a small economy with strong trade links, the Slovak Republic can't escape the adverse effects of the global economic downturn.

"The economy specialisation in car manufacturing, which has contributed to its past high growth, is a downside risk in the current circumstances," the OECD said.

Industrial production dropped a record 16.8% in December, the Slovak Statistical Office reports. The country's three carmakers were the key component of the decline. Output by Kia Motors, PSA Peugeot Citroen and Volkswagen might fall by as much 25% this year, the Economy Ministry has said.

Robin Bowman