The EU measure of harmonised inflation in Slovakia should reach 2.4 percent in 2009 and perhaps 2.3 percent by the end of the year, reads a communiqué from the Tuesday, February 3, meeting of the Slovak central bank's (NBS) bank board.
The NBS revised its previous prognosis from December and reduced its 2.7-percent estimate to 2.4 percent. It explains the new estimate by reference to the current and predicted change in the prices for mineral resources, which trickle down to energy prices. A secondary impact of the slower rise of energy prices should be, according to the NBS, a positive influence on prices for services. The impact of a shift to lower indirect taxes should, too, have a negative effect on the inflation rate, the NBS says.
"The expected slow-down in economic growth should also have a positive effect on the development of inflation," reads the communiqué. However, the exact effect of slower economic growth is hard to quantify. Consumer demand and retail prices should probably react to slower growth in the latter half of 2009, the NBS says.
The bank’s GDP growth estimate for 2009 has also been adjusted markedly downwards, from 4.7 to 2.1 percent. The NBS notes that one risk affecting its inflation prediction is the possible effect of further drops in production, which might result in even lower inflation. Another factor which might lead to lower-than-expected inflation is the possible impact of the weakening of the currencies of surrounding countries. TASR
Compiled by Zuzana Vilikovská from press reports
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