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EC: GDP to grow at 2.3%

SLOVAKIA will be the second fastest growing economy of the eurozone and will contribute to Europe’s overall economic recovery, which according to the recent winter 2014 forecast of the European Commission (EC), “began in the second quarter of 2013, [and] is expected to continue spreading across countries and gain strength, while at the same time becoming more balanced”.

SLOVAKIA will be the second fastest growing economy of the eurozone and will contribute to Europe’s overall economic recovery, which according to the recent winter 2014 forecast of the European Commission (EC), “began in the second quarter of 2013, [and] is expected to continue spreading across countries and gain strength, while at the same time becoming more balanced”.

While the EC is optimistic about the pace of Slovakia’s economic growth in 2014, projecting it at 2.3 percent, it has a gloomier view on public finances, suggesting that the country’s deficit is set to swell in the coming years. Nevertheless, Slovakia’s officials do suggest that the departure of the country from ‘the excessive deficit procedure’, in which Slovakia has lingered since 2009, is now within reach.

The general government deficit in 2013 is estimated to have reached 2.5 percent of GDP while the higher-than-budgeted VAT collection, together with lower-than-budgeted public investment, is expected to have contributed to this strong result, said the EC in its official release.

“The European Commission now perceives Slovak public finances to be on the threshold of exemption from the excessive deficit procedure,” said Radko Kuruc, an advisor to the Slovak Finance Minister Peter Kažimír, as quoted by the TASR newswire.

Nevertheless, the EC also projects Slovakia’s deficit to moderately rise above 3 percent in 2014 and 2015.

Martin Filko, the director of the Financial Policy Institute attached to the Finance Ministry, suggested in an official release that “ending the excessive deficit procedure in which we have been since 2009 is already within reach in May 2014, however, not without the EC improving its opinion on 2014 and 2015”.

The deficit outcome may still be affected by what it called the classification, currently under examination by Eurostat, of the government’s sale of emergency oil reserves in national accounts, the EC noted.

The EC projects the Slovak economy to grow at 3.2 percent in 2015 while suggesting that from the upcoming period the composition of growth “will become more balanced as the main driving force shifts from net exports to domestic demand”.

Employment will grow only modestly over the forecast horizon and inflation will remain low, the EC has said.

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