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Sme: Economy can have problems after election

ANY patchwork cabinet composed of more than three parties can cause instability of Slovakia, the Sme daily opined on March 7.

(Source: SME)

The Sme daily commented on the economic impact of the March 5 elecation for the upcoming period. So far, the Slovak economy has overcame crisis and been in good shape, with the growth expected at around 2.5 percent of GDP. The unemployment rate has been on the decline as well, while real wages are rising.

In 2016, the growth may be slightly slower than last year – when drawing of EU funds helped boost it – but household consumption may boost the growth through more shopping.  Problems could arise after two years, the daily estimates, as the national economy cannot grow markedly anymore and the influx of investors will not suffice to keep prosperity. Slovakia would need structural changes in several spheres, like education and research, but any new government to stem from the recent election is unlikely to be able to agree fully and without causing bigger problems, prognosticator of the Slovak Acadmey of Sciences, Vladimír Baláž, opined for Sme.

For the next two years, however, the system and the processes are set, and so the economy may work well thanks to own gravity. However, the uncertainty caused by the election results may dissuade foreign investors and make them postpone or even re-evaluate their investment in Slovakia.

Another issue is the fate of “social packages”, sets of social measures introduced by the outgoing government of Robert Fico and his Smer party. Some of the parties which exceeded the 5-percent threshold in the election and will thus make it to parliament announced that they would scrap such social packages, while others are not so radical and may be inclined to keep them operating. Moreover, if Smer was the one to put together a government, it would very probably introduce even a third social package. If, however, the currently opposition parties Most-Híd or Freedom and Solidarity (SaS) were part of the cabinet, the social packages may be changed or re-evaluated.

Analysts say that for now, Slovakia is not expected to get a lower economic rating. If it occurred, however, it would mean that the country would get worse conditions when borrowing money. Rating agencies react to specific governments and their actions, but it can take months for ratings to change.

Topic: Election


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