The Slovak economy will grow by 2.6 percent this year but by only 2 percent in 2013, according to the latest forecast by the Organisation for Economic Co-operation and Development (OECD), which was released on Tuesday, November 27.
"Economic growth, mainly driven by exports in the automotive sector, slowed in the second half of 2012, but was still among the strongest in the OECD area," said the OECD, as quoted by the TASR newswire. Compared to its previous forecast in May, the OECD has downgraded its forecast for Slovakia's economic growth in 2013 from 3 percent to 2 percent. A pick-up in global trade should then spur the economy, with growth in 2014 projected to reach 3.4 percent, it now predicts.
"Private consumption is likely to remain subdued due to the weak labour market and significant fiscal consolidation," said OECD. The organisation believes that the government will deliver on its goal to reduce the budget deficit to below 3 percent of GDP in 2013, but points out that this will require robust consolidation efforts. According to the OECD, however, cuts in spending should not concern "growth-enhancing items such as education and active labour market policies".
In the OECD's view, Slovakia's budget deficit will shrink from 4.9 percent in 2011 to 4.6 percent this year, to 2.9 percent in 2013, and then to 2.4 percent in 2014. General government debt is estimated to soar from 43.3 percent of GDP in 2011 to 52.2 percent this year. 2013 and 2014 should see the figure rise further to 54.9 percent and 56.2 percent of GDP, respectively. Slovakia's unemployment rate is expected to go up from 13.5 percent in 2011 to 13.7 percent in 2012. A slight drop to 13.6 percent is projected for 2013, before a further fall, to 13 percent, in 2014.
Compiled by Zuzana Vilikovská from press reports
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