Spectator on facebook

Spectator on facebook

Economy slightly lags behind potential

SLOVAKIA’S economy is currently about 1 percent below its potential, according to the report by the Council for Budgetary Responsibility, a supervisory body over the economic management of the state. The council was seeking the best way to calculate the potential product based on which it would be able to determine the structural deficit, the SITA newswire reported on March 11.

SLOVAKIA’S economy is currently about 1 percent below its potential, according to the report by the Council for Budgetary Responsibility, a supervisory body over the economic management of the state. The council was seeking the best way to calculate the potential product based on which it would be able to determine the structural deficit, the SITA newswire reported on March 11.

The Council for Budgetary Responsibility has already chosen the averaging of the available methods that are based on other model expectations, as well as other data.

“The output gap measured this way will be important input for calculating the structural balance and consolidation effort in Slovakia,” reads the commentary of the council, as reported by SITA.

The model allows one to see a strong conjuncture and unsustainable trends, especially in years 1997-98, when the performance of Slovakia’s economy stood at nearly 2 percent above its potential, as well as shortly before the beginning of the financial crisis in the years 2007-08, when the economy was nearly 4 percent above its average, SITA wrote.

On the other hand, the strongest recession came in 2009 when the economy lagged below its potential by 3 percent.

The main motivation for improving the estimated potential product and output is, according to the Council for Budgetary Responsibility, the ratification of fiscal compact and changes passed within the Stability and Growth Pact. Based on new legislation it will be necessary to measure and evaluate whether the divergence of structural deficit and the mid-term goals is not too big. The excessive divergence would launch correction mechanisms that would either increase income to the budget or reduce expenditures, SITA wrote.

Source: SITA

Compiled by Radka Minarechová from press reports

The Slovak Spectator cannot vouch for the accuracy of the information presented in its Flash News postings.

Top stories

General Prosecutor filed a motion for the dissolution of ĽSNS

The Slovak Supreme Court received a motion to dissolve the extreme right ĽSNS party founded and led by Marian Kotleba.

Jaromír Čižnár

Russian spies allegedly recruit also Slovaks

They are using martial art clubs in Germany and dozens more in other EU states, in the Western Balkans, and in North America.

Illustrative stock photo

EC scrutinises state aid for Jaguar Photo

There is a question whether the scrutiny may impact the carmaker’s plans to invest in Slovakia.

The construction site of a brand new plant of Jaguar Land Rover near Nitra.

GLOBSEC forum will host guests from 70 countries

The 12th year of the conference will be attended by the highest number of participants in its history.

Slovak President Andrej Kiska gives the opening speech of The Globsec 2016 security conference.