Slovak central bank lowers economic growth estimates

The National Bank of Slovakia (NBS) has lowered GDP growth projection to 2.6 percent next year, down from 2.9 percent in earlier forecasts.

The National Bank of Slovakia (NBS) has lowered GDP growth projection to 2.6 percent next year, down from 2.9 percent in earlier forecasts.

The NBS also revised downward its estimate of economic growth in 2016, by 0.2 percentage points to 3.3 percent. The outlook for economic development for this year remains unchanged –2.3 percent. As NBS Governor Jozef Makúch said on December 9, quoted by the SITA newswire, the prognosis was influenced on the one hand by the expected stronger local demand and on the other hand by weaker exports. Despite the expected growth over the prognosticated period, the Slovak economy, however, will not reach its full potential, according to the central bank. In spite of the continued growth, investments will not reach the pre-crisis level.

“For long-term sustainable growth of the Slovak economy and employment, it is necessary to continue the implementation of structural reforms supporting the business environment and labour market flexibility," Makúch said, adding that fiscal policy should complement monetary policy through these reforms and consolidate mainly to support growth, while also helping the aim of fulfilling these goals, in addition to structural reforms, also by improved absorption of European Union funds.

“The latest eurozone prognosis for next year recorded a tangible slowdown which translated into lower estimates for the growth of the Slovak economy by 0.3 percentage points in 2015 and 0.2 p.p. in 2016,” Makúch explained, as quoted by the TASR newswire. In 2015, it is mostly domestic demand that is estimated to contribute significantly to the growth. “In 2016, we also expect exports to complement the domestic demand,” he added.

Inflation in October 2014 reached a negative value of -0.1 percent, the lowest figure in modern history. “Another slowdown in the expected development of grocery prices and energy rates translated into lower inflation predictions for the next year: a reduction by 0.7 percentage point to 0.5 percent,” said Makúch.

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