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World Bank: Slovakia economically most stable EU8 state

SLOVAKIA enjoyed remarkable economic growth and reduced unemployment in the first half of 2006 despite higher world oil prices and turbulence on international finance markets, says a World Bank report released on September 28.

Similar developments were also seen in other Central and Eastern European (CEE) countries and the Baltic states, collectively known as the EU8, which entered the European Union on May 1, 2004.

The World Bank report also warns, however, that political developments in some countries are disrupting economic reforms and may delay the introduction of the euro.

"Slovakia now seems the most stable of these counties," said the World Bank’s economist for Slovakia, Anton Marcinčin.

According to the report, Slovakia’s GDP growth is driven mainly by domestic consumption rather than net exports. The World Bank's estimate of Slovak GDP growth is 6.7 percent for 2006.

"Growth is generating job creation, which is squeezing unemployment down across the whole CEE region, including Slovakia and Poland, where unemployment is highest," Marcinčin said.

The EU8 is also seeing relaxed fiscal discipline, which is hurting the outlook for adoption of the euro. "So far, Slovakia has set a positive example in this respect, as it plans to meet the deficit criteria as set in the convergence program by the previous government," Marcinčin noted.

He added that "the only way to be seen as reliable by international financial markets" is for the new government to draft and execute "a responsible budget" for 2007.

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