In 2013, the Slovak economy will grow at a rate slower than one percent. This estimate of the Slovak Central Bank (NBS) and bank analysts was underpinned on Wednesday, May 29 by the Organisation for Economic Cooperation and Development (OECD), which revised downward the GDP growth estimate of Slovakia this year to 0.8 percent.
Last year in its assessment report, the OECD predicted for Slovakia economic growth of 2 percent for 2013. It expects a moderate economic recovery in 2014, when GDP should grow by 2 percent.
"The economy is suffering from a difficult external environment and the fiscal consolidation is stifling domestic demand," the OECD writes in its current forecast of economic prospects for Slovakia, as quoted by the SITA newswire. According to the OECD, exports from Slovakia will rise this year thanks to stronger world trade and the gradual recovery in the eurozone. On the other hand, domestic consumption will remain dampened because of rising unemployment, low wage growth and continued fiscal consolidation.
This, according to the OECD, is set in a way to lead the country out of the excessive deficit process and to avoid public debt exceeding limits defined in the constitutional debt brake law. In its outlook report, the OECD also highlights areas on which the country should focus. Better use of EU structural funds could provide the required impetus, together with strengthening active labour market policies so that cyclical unemployment does not become structural, the document suggests. The OECD expects weak economic growth to cause a further rise in unemployment to 14.6 percent this year and 14.7 percent next year. However, it will also cause slower price growth. Inflation in Slovakia is expected this year to fall to 1.7 percent and next year it should be 0.1 percentage points lower.
Compiled by Zuzana Vilikovská from press reports
The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.
30. May 2013 at 10:00