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NBS: Inflation will decrease a year after euro introduction

The National Bank of Slovakia (NBS) has significantly upped its estimate for inflation in 2008 in the most recent mid-term prediction presented to its board on July 29.

The National Bank of Slovakia (NBS) has significantly upped its estimate for inflation in 2008 in the most recent mid-term prediction presented to its board on July 29.

But in 2009, the first year after the country's entry to the eurozone, inflation should be lower than the central bank originally estimated. This year, the NBS expects higher dynamics in the price of foodstuffs, energy, and services compared to its estimate from three months ago, the TASR newswire wrote.

Thus, the harmonised inflation at the end of the year will reach 4 percent compared to the original prognosis of 2.8 percent, and the NBS increased the estimate of its average value from 3.2 percent to 3.9 percent. But one year after the introduction of the euro (2010), inflation will reach 2.8 percent, which is a slight decrease compared to the original forecast of 3.1 percent.

However, the year-long average will still be higher (3.4 percent compared to the predicted 3 percent). The growth of the Slovak economy without inflationary effects culminated in 2007, when it reached a record-breaking 10.4 percent, while a gradual slowdown is expected in 2008-2010. However, for this year, the NBS increased its estimate of the growth made three months ago, namely from 7.4 percent to 7.6 percent. For the following two years the NBS has revised its forecast downwards from 6.9 percent to 6.6 percent in 2009 and from 6.5 percent to 6.4 percent in 2010. TASR

Compiled by Zuzana Vilikovská from press reports
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