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Ministry: Slovakia’s economy to grow by 2.9 percent of GDP in 2015

THE SLOVAK economy is expected to grow by 2.9 percent of GDP year-on-year in 2015, according to the latest prognosis of the Finance Ministry’s Finance Policy Institute (IFP) presented by Finance Minister Peter Kažimír.

Finance Minister Peter Kažimír(Source: TASR)

In September, the IFP’s growth outlook of GDP for 2015 was an increase of 2.6 percent y-o-y, i.e. 0.3 percentage point lower.

“A piece of good news for the country is that the revival of its economy continues at a sound pace, despite significant problems in the external environment, mainly in the eurozone,” Kažimír said on February 3, as quoted by the TASR newswire. “Our small open economy remains stable, with investors trusting us, and we’re quite optimistic when it comes to future outlooks.”

Robust household consumption should be the main factor pulling the national economy up in 2015. “The growing household consumption is a result of continuing good developments on the labour market, with consumer sentiment also positive,” said Kažimír, adding that another factor that should contribute to Slovak economic growth is low energy prices, especially those of oil.

Real incomes will grow mainly thanks to zero inflation, with the condition of the labour market continuing to improve. Meanwhile, investment growth should be driven mainly by the private sector.

The minister also announced that Slovakia’s GDP is expected to increase by 3.6 percent y-o-y in 2016 and by 3.7 percent y-o-y in 2017. Following steep growth of 4.4 percent y-o-y in 2014, a seven-year best, real salaries should go up by 2.6 percent y-o-y in 2015.

The unemployment rate should continue to fall from the 12.9 percent projected for 2015 to 10 percent in 2018. Meanwhile, employment should go up by 0.8 percent y-o-y in 2015. The ministry expects inflation in Slovakia in 2015 to stay flat, with increases to 1.6 percent in 2016 and to 1.8 percent in 2017.

“We expect better developments in Slovakia’s economy in 2015 than what has been seen in recent months,” the minister said. “We also expect the stability of the legislative environment to have positive effects," he said, adding that the Slovak economy is expected to perform better in 2015 despite the conflict in Ukraine and the situation in Greece.

The ministry harmonises its forecasts for this year with expectations of the Slovak central bank – the National Bank of Slovakia, NBS – which in January also updated its growth forecast to 2.9 percent. However, just like the central bank, the Finance Ministry also drastically reduces its estimate of consumer prices growth, expecting them to stagnate, the SITA newswire wrote. Nevertheless, the minister did not rule out the possibility that prices may go down this year.

Revised were also the inflation forecasts for the next two years. For both years, analysts of the Finance Ministry reduced the expected price growth by 0.3 percentage points - for 2016 to 1.6 percent and for 2017 to 1.8 percent. Gradual acceleration of price growth should continue in 2018 when the Ministry estimates inflation at 2 percent.

 

 

Topic: Economics


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