OECD forecasts 1.9 percent growth for Slovak economy in 2014

Growth in the Slovak economy will accelerate from the 0.8 percent expected this year to 1.9 percent next year thanks to increased demand on foreign markets, which is the engine for growth in investments in Slovakia as well as for Slovak exports, according to the autumn forecast of the Organisation for Economic Co-operation and Development (OECD). According to the forecast published November 19, although Slovak household spending will continue to grow, a more significant recovery will probably continue to be hampered by adverse conditions on the labour market, especially by the persistently high unemployment. The TASR newswire quoted the OECD estimates as saying that the unemployment rate will fall from 14.4 percent this year to 14.2 percent in 2014, before dropping to 13.7 percent in 2015. Apart from this, domestic demand in Slovakia will also be held back by measures due to be implemented in 2014 in order to reduce the budget deficit below 3 percent of GDP.

Growth in the Slovak economy will accelerate from the 0.8 percent expected this year to 1.9 percent next year thanks to increased demand on foreign markets, which is the engine for growth in investments in Slovakia as well as for Slovak exports, according to the autumn forecast of the Organisation for Economic Co-operation and Development (OECD).

According to the forecast published November 19, although Slovak household spending will continue to grow, a more significant recovery will probably continue to be hampered by adverse conditions on the labour market, especially by the persistently high unemployment. The TASR newswire quoted the OECD estimates as saying that the unemployment rate will fall from 14.4 percent this year to 14.2 percent in 2014, before dropping to 13.7 percent in 2015. Apart from this, domestic demand in Slovakia will also be held back by measures due to be implemented in 2014 in order to reduce the budget deficit below 3 percent of GDP.

According to the OECD, the limit on state debt included in the Slovak Constitution is beginning to tie the Government’s hands and to limit the flexibility of its fiscal policy. Slovakia’s budget deficit is predicted to reach 3 percent of GDP this year. It is expected to drop to 2.8 percent next year and to 2.6 percent in 2015.

The OECD expects the inflation rate in Slovakia to fall from the 3.7 percent recorded last year to 1.6 percent this year. In 2014, inflation is expected to accelerate to 2 percent, before growing further to 2.1 percent in 2015. Finally, the OECD advises Slovakia to support programmes that will accelerate job creation while at the same time maintaining the current rate of productivity improvement. Spending on infrastructure and education should be a priority for the country, therefore.

The OECD changed it estimates from its May forecast for the growth or eurozone economies in 2014, foreseeing it as 1 instead of 1.1 percent for the whole eurozone; and 1.9 percent instead of 2 percent for Slovakia, the Sme daily wrote on November 20.

(Source: TASR, Sme)
Compiled by Zuzana Vilikovská from press reports
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