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EC predicts 1-percent growth of Slovak economy

Slovakia’s economy could rise by 1 percent this year, according to the spring prognosis of the European Commission. According to the actual numbers, the EC decreased its February prediction by 0.1 percentage points. In 2014 the rate of economic growth should stand at 2.8 percent, down by 0.1 percentage points compared to February, the SITA newswire reported on May 3.

Slovakia’s economy could rise by 1 percent this year, according to the spring prognosis of the European Commission. According to the actual numbers, the EC decreased its February prediction by 0.1 percentage points. In 2014 the rate of economic growth should stand at 2.8 percent, down by 0.1 percentage points compared to February, the SITA newswire reported on May 3.

The main reason for slower growth is expected to come from low domestic demand reflecting the situation on labour market, as well as the drop in external demand from the country’s traditional business partners.

Yet, Brussels expects that the economy will gradually recover as of the second half of the year. This might result in the restoration of private investment and increase in foreign demand, SITA wrote.

The EC predicts consumer prices will stand at 1.9 percent, down from last year’s 3.7 percent, while in 2014 it should reach 2 percent. This area will also be affected by the situation on the labour market, which is not expected to improve and will not support growth of domestic demand.

The jobless rate should increase to 14.5 percent this year, while in 2014 it should drop to 14.1 percent, the EC predicts.

On the other hand, the EC expects better development in public finances, saying it believes the Slovak government will be able to shrink the deficit below 3 percent of GDP. In February it expected the deficit to stand at 3.3 percent, SITA wrote.

Finance Minister Peter Kažimír said that the prognosis of the EC is positive, regarding the global development, and said that based on the predictions Slovakia is likely to improve its situation next year, which might result in a drop in interest rates set by international financial markets.

Yet, the opposition Slovak Democratic and Christian Union (SDKÚ) considers the EC prognosis as confirmation of the negative impacts of bad consolidation of public finances on the jobless rate in Slovakia, SDKÚ MP Ivan Štefanec told SITA.

Source: SITA

Compiled by Radka Minarechová from press reports

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