EC forecasts Slovak deficit to reach 2.8 percent

THE EUROPEAN Commission forecast, published on February 5, says that Slovakia’s 2014 budget deficit reached 3 percent of GDP. This year it is estimated at 2.8 percent.

(Source: Sme)

Despite a slowdown in exports, Slovakia’s economy grew faster in 2014 because of a recovery in domestic demand, which is expected to remain the motor of growth in 2015 and 2016, according to the forecast.

Unemployment should gradually decrease in line with the improvement in economic activity. Inflation dropped sharply in 2014 and is projected to recover only slowly. The government’s fiscal position is also expected to improve.

Exports dropped sharply in the second and third quarters of 2014, mainly due to weak demand from Slovakia’s main trading partners. Export growth is projected to have slowed down to 4.4 percent in 2014 and is expected to decline further in 2015, before rebounding the year after.

Imports are likely to have grown faster than exports in 2014 due to the recovery in domestic consumption and investment, which would mean that net exports were a drag on GDP growth in 2014. From 2015, however, imports are forecast to evolve more in line with exports and Slovakia is expected to continue running a current account surplus over the forecast horizon, according to the European Commission. 

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