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New FinMin growth projections

THE FINANCE Ministry has released projections of 3.6 per cent growth in gross domestic product (GDP) on the heels of growth in real household consumption and investment. Household consumption should grow by 4.2 per cent this year, and investment by 8 per cent.

The ministry expects that the most rapidly growing component of domestic demand will be the accumulation of gross fixed capital, although growth will slow compared to last year. With a lower tax burden on corporate entities, business sector demand should continue to grow. A moderate decrease in nominal interest rates will improve financial results for the industrial sector as well.

The projections are based on increasing real wages and household consumption combined with decreasing tax burdens and unemployment rate, which the ministry projects to drop to 18.9 per cent this year, from a February 2002 figure of 19.6 per cent.

The ministry expects real wages to grow by 3.1 per cent, with inflation figured at 4.7 per cent, two points lower than the inflation rate projected in the 2002 state budget. Growth in nominal exports should slow along with imports, which should reduce the current account deficit to 7.8 per cent of GDP, or Sk81.2 billion.

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