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ECONOMIC BRIEFS

Deutsch Bank AG comments on Slovakia

According to an evaluation by the German Deutsch Bank AG on the Slovak economy, the preliminary results for 1996 indicate continued economic growth for the third straight year in the country. The export of goods and services in the first three quarters of 1996 declined 3.9 percent, however, that was the result of decreased demand for raw materials and semi-finished products by EU countries - Slovakia's main trade partners.

Although an economic rule says that a significantly growing economy that trades with economies with slower growth automatically runs a trade deficit, Slovak exports also have a structural handicap.

The most important export commodities include iron and steel, which now face declining demand on the world market. Deutsch Bank does not see much room for improving the situation, and it expects the Slovak trade deficit to reach $2 billion (60 billion Sk) and GDP growth of 5.5 percent for 1997.

The bank believes that an extensive fiscal policy is not the solution for the current situation, since the growing fiscal deficit could stimulate growth in imports even more.

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