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NBS predicts higher economic growth and price stagnation

THE NATIONAL Bank of Slovakia (NBS), the country’s central bank, has revised its December prognosis, predicting higher economic growth and a zero increase in prices in 2015.

The most significant change to its previous forecast is the fall in the prices of oil, slightly adjusted by the weaker exchange rate of the euro.

“The positive demand shock impacted the improvement of outlooks for Slovakia’s economy in the medium term,” the NBS said, as quoted by the TASR newswire.

The economic growth should accelerate to 2.9 percent this year and to 3.6 percent in 2016. The original prognosis forecast the economy to rise at 2.6 percent this year and 3.3 percent in 2016.

The lower prices of oil should positively impact the most important business partners of Slovakia, thanks to which the demand for Slovak products and services abroad should increase. This year, however, it will be the domestic demand which will affect GDP growth.

The expected fall in energy prices in 2015 and 2016 also affected inflation predictions.

“The prices will stagnate this year, similarly to 2014,” NBS said, as quoted by TASR, adding that a more significant rise in prices at 1.4 percent is expected in 2016.

Better development of domestic demand will also impact the increase in employment. It should increase by 0.9 percent this year and by 0.7 percent in 2016, according to the NBS.

The nominal wages will rise with a slower tempo than in the previous prognosis, as a result of a low increase in prices. In real terms, however, the situation of households will improve.

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