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EC predicts weaker economic growth

The European Commission expects the Slovak economy to grow by just 1.1 percent this year, compared to 2 percent in 2012 and 3.2 percent in 2011, the TASR newswire reported on February 22.

The European Commission expects the Slovak economy to grow by just 1.1 percent this year, compared to 2 percent in 2012 and 3.2 percent in 2011, the TASR newswire reported on February 22.

GDP figures for 2012 were down mainly for Slovakia's export-oriented automotive industry, while the contribution of domestic demand was depressed due to the persistently high unemployment rate and a drop in private investments, according to the EC report.

The effect of car exports will be subdued this year. Moreover, the EC report foresees some negative short-term impact deriving from efforts to consolidate the public finances, and reduced private consumption, TASR wrote.

On the other hand, the EC predicts that in 2014 economic growth will increase to 2.9 percent, mostly due to a rise in foreign demand and gradual strengthening of consumer confidence and domestic demand.

The EC also predicts that the jobless rate will stand at around 14 percent in 2013, before shrinking moderately to 13.6 percent next year. Inflation should stand at 1.9 percent this year and 2 percent in 2014, down from 3.7 percent in 2012, TASR reported.

The budget deficit is now projected to have reached 4.8 percent of GDP in 2012, thus dropping slightly from 4.9 percent of GDP in 2011. The consolidated general government deficit in 2013 and 2014 is predicted by the EC to fall to 3.3 and 3.4 percent, respectively. The Slovak government's official target is to reduce the budget deficit to below 3 percent this year.

As far as Slovakia’s public debt is concerned, it will continue to rise and is forecast to reach 55.1 percent of GDP in 2013 and 57.1 percent of GDP in 2014, according to TASR.

Slovakia’s Finance Minister head Peter Kažimír responded by noting that Slovakia is expected to be one of the few eurozone countries to avoid recession this year, TASR wrote.

“After Estonia and Malta, we will be, along with Ireland, the third-fastest growing economy,” Kažimír said.

The minister said that he sees the risks presented by the EC, but that the government’s commitment to squeeze the public finance deficit below 3 percent of GDP this year still holds, TASR reported.

Source: TASR

Compiled by Radka Minarechová from press reports
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