Economy projected to grow slower this year, by 2.3 percent

Slovak economy is expected to see a growth of 2.3 percent this year, 2.9 percent next year and 3.5 percent in 2016, according to the latest prognosis released by the Slovak Central Bank (NBS) published on September 30. In comparison to the previous estimate, NBS reduced expectations of growth by 0.1 percentage point for 2014 and 0.3 percentage point for 2015. “In real economy, prediction risks stem from potential additional escalation of geopolitical tensions,” NBS governor Jozef Makúch said at a press conference, as quoted by the TASR newswire. “Also, specific technical risk is posed by the adoption of a new ESA 2010 methodology in national accounts statistics.” It is mostly domestic consumption that might influence the growth of GDP this year. “The structure of economic growth is undergoing changes, with the share of exports beginning to decline in favour of rising domestic demand,” said NBS vice-governor Ján Tóth, adding that domestic demand fuels more than half of economic growth now. NBS estimates that consumer prices will stagnate this year and see a growth of 1.2 percent in 2015, a prognosis that prompted the central bank to expect a lower inflation by 0.4 percentage point. Among reasons for this, Tóth cited lower food prices as well as slower development in prices of services. Inflation is likely to reach 1.9 percent in 2016. NBS also stated that salaries see a surprisingly accelerated growth, which does not reflect the inflation-free environment. “This is mostly due to developments not only in public but also private sectors,” claimed Tóth, adding that salaries grow mostly in industrial sphere and public sector. Foreign demand continues to pose a potential risk for Slovak economy. On the contrary, it is domestic demand that might spur further growth. The NBS also sees risks in the future development of inflation which might be pushed by higher oil prices and lower euro exchange rates, whereas food prices could have the opposite effect.

Slovak economy is expected to see a growth of 2.3 percent this year, 2.9 percent next year and 3.5 percent in 2016, according to the latest prognosis released by the Slovak Central Bank (NBS) published on September 30.

In comparison to the previous estimate, NBS reduced expectations of growth by 0.1 percentage point for 2014 and 0.3 percentage point for 2015. “In real economy, prediction risks stem from potential additional escalation of geopolitical tensions,” NBS governor Jozef Makúch said at a press conference, as quoted by the TASR newswire. “Also, specific technical risk is posed by the adoption of a new ESA 2010 methodology in national accounts statistics.”

It is mostly domestic consumption that might influence the growth of GDP this year. “The structure of economic growth is undergoing changes, with the share of exports beginning to decline in favour of rising domestic demand,” said NBS vice-governor Ján Tóth, adding that domestic demand fuels more than half of economic growth now.

NBS estimates that consumer prices will stagnate this year and see a growth of 1.2 percent in 2015, a prognosis that prompted the central bank to expect a lower inflation by 0.4 percentage point. Among reasons for this, Tóth cited lower food prices as well as slower development in prices of services. Inflation is likely to reach 1.9 percent in 2016.

NBS also stated that salaries see a surprisingly accelerated growth, which does not reflect the inflation-free environment. “This is mostly due to developments not only in public but also private sectors,” claimed Tóth, adding that salaries grow mostly in industrial sphere and public sector.

Foreign demand continues to pose a potential risk for Slovak economy. On the contrary, it is domestic demand that might spur further growth. The NBS also sees risks in the future development of inflation which might be pushed by higher oil prices and lower euro exchange rates, whereas food prices could have the opposite effect.

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