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IFP: Last year’s consolidation reduced GDP growth by 0.2 p.p.
17 Jul 2014 Flash News
Expenditure cuts appear to have been the most painful element for the Slovak economy in the short term, stated the Financial Policy Institute (IFP) in its latest report in which it looked into the impact of the government’s consolidation packages in recent years.
The least painful impact on economic growth has been an increase in indirect taxes, the TASR newswire quoted IFP on July 16.
“This was due in particular to a positive situation in the world economy, Slovakia’s accession to the European Union, structural reforms, and also a low starting level for the economy,” said IFP. According to the Institute, the consolidation that began in 2011 reduced economic growth by between 1 and 1.8 percentage points.
“On the revenue side, an increase in taxes seems to have had a smaller negative impact on the economy than increases in levies,” said IFP.
The IFP’s mission is to provide reliable macroeconomic and fiscal analyses and forecasts for the Slovak government and public. It also serves as a policy arm of the Finance Ministry.
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