Slovak economy should grow faster than expected

THE NATIONAL Bank of Slovakia (NBS), the country’s central bank, has increased its estimate of the country’s GDP growth for 2015 by 0.2 percentage points to 3.5 percent year-on-year.

Jaguar Land Rover may impact the economic growth.Jaguar Land Rover may impact the economic growth. (Source: TASR)

This stems from an updated medium-term forecast released by the bank.

NBS has also changed its estimate for 2016 from 3.1 percent to 3.2 percent. In 2017, GDP should grow by 3.3 percent, which represents an improvement of 0.1 percentage points compared to the previous prognosis, the TASR newswire reported.

The change in the projection was motivated by low oil prices, among other factors, said NBS Deputy Governor Ján Tóth, as reported by TASR. It is estimated that oil prices should fall by 29 percent y-o-y in 2016 and a further 23 percent in 2017.

Another significant factor should be the arrival of British carmaker Jaguar Land Rover to Slovakia, as well as expected voluminous public investments related to the drawing of EU funds.

“The low oil prices should be a positive factor for the eurozone economy,” Tóth said, as quoted by TASR. “On the other hand, there’s a negative effect represented by China, which is important for Slovakia via Germany. These effects will be neutralised mutually, however, so foreign demand will remain unchanged.”

NBS has meanwhile revised its estimates for inflation downwards. According to an updated prediction, inflation should reach 0.4 percent in 2016, while in December it was forecast by NBS to be 0.7 percent.

“An acceleration of inflation has thus been postponed to 2017,” Tóth said, as quoted by TASR, adding that it may reach 1.8 percent.

Real wages should increase by 3.3 percent y-o-y in 2016 and by 2.1 percent in 2017. Back in December, the estimate for 2016 was at 2.9 percent.

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