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Slovakia’s central bank releases report on ‘Economic Convergence’

Although Slovakia's bid to draw level with more economically developed countries will slow down in the next few years, it should not come to a complete halt, reads an Analysis of Slovakia's Economic Convergence released by Slovakia’s central bank (NBS) on July 16, the TASR newswire reported.

Although Slovakia's bid to draw level with more economically developed countries will slow down in the next few years, it should not come to a complete halt, reads an Analysis of Slovakia's Economic Convergence released by Slovakia’s central bank (NBS) on July 16, the TASR newswire reported.

The global economic crisis is expected to affect Slovakia's economy this year in particular, but its negative effects will be perceptible in the next few years as well, according to the NBS. Slovakia was influenced by the crisis only slightly last year as its economic growth was still 6.4 percent year-on-year, while unemployment dropped at the same time. Slovakia's economic performance exceeded 70 percent of the EU average last year.

The global fall in demand began to have a significant effect on Slovakia in early 2009 according to the report. “The Slovak economy shrank by 5.6 percent year-on-year in 1Q09, which is significantly more than the EU average. Economic growth will be revitalised as late as 2010,” say the NBS analysts.

The NBS report estimated that gross domestic product (GDP) will fall by 4.2 percent y-o-y in 2009, while low foreign demand will be the most restrictive factor vis-a-vis export-oriented businesses. This will lead to a significant slowdown in Slovakia's economic convergence and relative price levels compared to more developed countries.

Slovakia's public finance deficit will equal the EU average this year, and will do so in 2010 and 2011 as well, Finance Ministry spokesman Miroslav Šmál told TASR on July 16 in response to the central bank's analysis.

According to Šmál, the high public-finance deficit that could reach as much as 6 percent of GDP this year is a result of the global economic crisis which has affected Slovakia's most significant trading partners. Šmál also stated that the ministry wants to avoid a significant increase in the public debt and noted that Slovakia currently has one of the lowest public debts in the EU. TASR

Compiled by Zuzana Vilikovská from press reports
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