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Big bank says higher inflation and GDP go hand in hand with

According to an analysis of the Slovak economy released by the Slovak central bank (NBS) on July 23, inflation this year will reach 3.2 percent though in the next two years it will drop to 3 percent. However, in view of the need to catch up with the economic levels of the more developed EU countries, Slovakia can expect inflation against the average of the EU to increase by some 1.2 percentage points over the next few years, the TASR wrote. According to the NBS it is impossible to increase the efficiency of the economy without raising the relative price level. Moreover, after the introduction of the euro on January 1st, the offsetting effect of bolstering the exchange rate will disappear. "The influence of the strengthening of the exchange rate on inflation in 2007 was low, so for the next 10-20 years – it will be necessary to factor in a higher price growth than elsewhere in the eurozone," says NBS. During this convergence period, a key role in stabilising prices will be played by government fiscal policy, according to NBS.

According to an analysis of the Slovak economy released by the Slovak central bank (NBS) on July 23, inflation this year will reach 3.2 percent though in the next two years it will drop to 3 percent. However, in view of the need to catch up with the economic levels of the more developed EU countries, Slovakia can expect inflation against the average of the EU to increase by some 1.2 percentage points over the next few years, the TASR wrote.

According to the NBS it is impossible to increase the efficiency of the economy without raising the relative price level. Moreover, after the introduction of the euro on January 1st, the offsetting effect of bolstering the exchange rate will disappear. "The influence of the strengthening of the exchange rate on inflation in 2007 was low, so for the next 10-20 years – it will be necessary to factor in a higher price growth than elsewhere in the eurozone," says NBS. During this convergence period, a key role in stabilising prices will be played by government fiscal policy, according to NBS.

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