NBS: Slovak GDP likely to rise 2.4 percent in 2014

SLOVAKIA’S GDP is estimated to rise by 2.4 percent in 2014, which amounts to growth of 0.1 percentage point higher than the Slovak Central Bank’s (NBS) January prognosis, NBS Governor Jozef Makúch said at a press conference on March 25. GDP growth is expected to accelerate to 3.3 percent in 2015 and to 3.5 percent in 2016, in accordance with the original January prognosis.

SLOVAKIA’S GDP is estimated to rise by 2.4 percent in 2014, which amounts to growth of 0.1 percentage point higher than the Slovak Central Bank’s (NBS) January prognosis, NBS Governor Jozef Makúch said at a press conference on March 25. GDP growth is expected to accelerate to 3.3 percent in 2015 and to 3.5 percent in 2016, in accordance with the original January prognosis.

The increased estimate for this year is mostly due to positive developments in the labour market appearing sooner than expected. “Therefore, higher growth in employment with a positive effect on the development of unemployment is expected this year,” Makúch said, as quoted by the TASR newswire. “In the future, the continuing growth in economic activities is likely to generate the creation of new jobs, in response to which the unemployment rate at the far end of the prognosis is estimated to drop to 12 percent”.

In the previous prognosis published in December 2013 the central bank estimated the growth rate of gross domestic product in 2014 at 2.2 percent, while in January the bank revised the estimate upward to 2.3 percent, the SITA newswire wrote. The NBS, however, has revised more significantly its estimate of the development of consumer prices. This year, average harmonised inflation is expected to amount to 0.2 percent, which is 0.4 percentage points less than originally estimated.

“Prices are expected to stagnate in the first half of the year, while they should start growing toward the end of the year,” said Makúch. In spite of this, the expected price growth is dangerously low for the economy and the central bank does not rule out a risk of deflation, defined as a yearly drop in prices in four consecutive quarters. The probability of deflation in 2014 is some 20 to 25 percent. The current price development is not more dramatic than in the crisis years of 2009-2010 when deflation in the macroeconomic sense did not occur. For 2015 and 2016, the central bank kept its prognoses of average growth of consumer prices at 1.9 percent and 2 percent, respectively.

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