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INEKO: GDP to drop by 4.3% and deficit to increase to 5.2% of GDP in 2009

Slovakia’s gross domestic product (GDP) will fall by 4.3 percent and the state budget deficit will reach 5.2 percent of GDP this year, according to a survey of 18 economists carried out by the INEKO institute at the end of May and beginning of June.

Slovakia’s gross domestic product (GDP) will fall by 4.3 percent and the state budget deficit will reach 5.2 percent of GDP this year, according to a survey of 18 economists carried out by the INEKO institute at the end of May and beginning of June.

The economists also predicted that unemployment would increase to 13 percent, and would continue to rise slightly in 2010 as well.

Compared to a similar survey from March, the economists’ estimates have worsened considerably. In March, they were forecasting a 1-percent fall in GDP, and a deficit of no more than 4 percent. Thirteen out of the 18 economists expected an annual GDP decrease in March; the latest survey found all 18 of them estimating a fall in GDP.

According to the current assessment of economists, a slight economic recovery should emerge next year, representing growth of some 0.6 percent. The state budget deficit should, however, stay at the comparatively high level of 4.8 percent, while they expect the current unemployment rate of some 11 percent to increase even further, to 13.3 percent in 2010. The unemployment rate should drop to 12.2 towards the end of 2011.

INEKO called on the government to try to keep the deficit down and support the economy by cutting taxes and payments to the state and by lowering the public finance deficit via savings in expenditures, including public-sector salaries. TASR

Compiled by Zuzana Vilikovská from press reports
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