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NBS expects GDP to rise

SLOVAKIA’S GDP is estimated to rise by 2.4 percent in 2014, up by 0.1 percentage points compared to the previous updated prognosis the Slovak National Bank (NBS) released in January. In 2015 the GDP growth is expected to accelerate to 3.3 percent, and to 3.5 percent in 2016, which is in accordance with the January prognosis.

SLOVAKIA’S GDP is estimated to rise by 2.4 percent in 2014, up by 0.1 percentage points compared to the previous updated prognosis the Slovak National Bank (NBS) released in January. In 2015 the GDP growth is expected to accelerate to 3.3 percent, and to 3.5 percent in 2016, which is in accordance with the January prognosis.

In the previous prognosis published in December 2013, the central bank estimated the growth rate of GDP in 2014 at 2.2 percent, while in January it 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.

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. For 2015 and 2016, the central bank kept its prognoses of average growth of consumer prices at 1.9 percent and 2 percent, respectively, as reported by SITA.
Regarding the labour market, the NBS predicts the employment rate will increase to 0.7 percent, up by 0.4 percentage points compared to its previous prognosis. In 2015 and 2016 the employment rate should increase equally by 0.6 percent.

The increased estimate for this year is mostly due to positive developments in the labour market occurring sooner than expected.

“Therefore, higher growth in employment with a positive effect on the development of unemployment is expected this year,” NBS Governor Jozef Makúch said, as quoted by the TASR newswire.

The unemployment rate should reach 13.5 percent in 2014, down from previously expected 13.8 percent, while in 2015 it should stand at 12.8 percent and in 2016 at 12 percent, SITA wrote.

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