Finance Ministry: Consolidation will slow economy, but is essential

The planned consolidation of public finances in 2011 will slow down growth in the Slovak economy, according to the latest macroeconomic prognosis drawn up by the Finance Ministry. Despite an expected increase in European funds, economic growth in 2011 will be held back by 0.5 percentage points due to measures designed to reduce the state deficit.

The planned consolidation of public finances in 2011 will slow down growth in the Slovak economy, according to the latest macroeconomic prognosis drawn up by the Finance Ministry. Despite an expected increase in European funds, economic growth in 2011 will be held back by 0.5 percentage points due to measures designed to reduce the state deficit.

The Slovak government plans to lower the deficit from the 7.8 percent of GDP estimated for this year to 4.9 percent next year. This will require fiscal measures equalling 2.5 percent of GDP, as the deficit would reach 7.4 percent of GDP next year if left unchecked. “Even though economic growth in 2011 would stand at 3.8 percent instead of the estimated 3.3 percent without fiscal consolidation, the prospects for securing stable growth in the years to come would be significantly threatened,” the ministry states.

The Finance Ministry also reported that its estimate for growth in the Slovak economy this year has significantly increased, to 4 percent, the TASR newswire wrote. According to the ministry’s analysts, growth in the Slovak economy will accelerate due to foreign demand and reserves in the 2010-12 period, as well as a revival in household consumption in the wake of a better labour market situation after 2012.

Source: TASR

Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

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