THE MONETARY programme of the National Bank of Slovakia (NBS) for 2003 projects economic growth of 3.7 to 4.1 per cent, and says the health of the economy will largely depend on increased investment at home and a revival in international economic growth, especially in the EU.
Average annual inflation should rise significantly to 8.2-9.3 percent because of economic austerity measures and deregulation of energy prices, central bank governor Marián Jusko told reporters December 17, adding that inflation should hit a year-end rate of 7.7-9.7 per cent.
Core inflation is expected to range between 2.7 per cent and 5 per cent and net inflation between 2.9 per cent and 4.5 per cent, according to the bank's programme. Changes in VAT should account for 0.3 percentage points of the increase.
The bank estimated that unemployment would reach 17.5 to 18 per cent, and that real wages would grow marginally after 6 per cent growth this year.
While incoming foreign investors will bring Sk42 billion ($1 billion) into the country, of which Sk12 billion ($290 million) would be through the privatisation of the SE energy utility, the bank estimated the jobs this inflow created would be offset by continued layoffs at privatised companies.
The value of imports is expected to rise by 7.2 per cent, against a 10.3 per cent growth in exports, slightly improving the trade balance deficit to Sk85 billion ($2 billion) in 2003. This should narrow the current account deficit to Sk73 billion ($1.8 billion), or 6.2 percent of GDP, Jusko said.
The state's gross foreign debt is predicted to fall by $167.4 million to $11.5 billion. Principal payments of government bonds will cut the debt by $820.1 million, the bank said, but increased lending to companies through loans and securities issues will increase it by $375.1 million, and financing of imports with short-term loans by a further $277.9 million.
As for the currency, the central bank is expecting the crown to rise next year, and says it will act to correct exchange rates that do not reflect real economic performance.
- Spectator staff
