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OECD: Slovak GDP to grow by 3.3 percent this year

Slovakia's economy is expected to maintain its growth this year before accelerating in 2018, according to the international organisation.

Illustrative stock photo(Source: SME)

Slovak GDP should grow by 3.3 percent this year and by as much as 4.1 percent next year, the Organisation for Economic Cooperation and Development (OECD) wrote in its latest prediction on June 7.

The developments should be fuelled by strong domestic demand. In addition, improvements to the situation on the job market will contribute towards a rise in household consumption, the TASR newswire wrote.

Meanwhile, the unemployment rate is still expected to drop from the 9.6 percent of 2016 to this year's 8.5 percent. Next year, it should fall further to 7.6 percent, which would be the lowest figure since Slovakia became independent in 1993.

The OECD also expects private consumption to record sound growth, as it should rise by 3.1 percent this year and by 3.2 percent in 2018. Last year, it increased by 2.9 percent. Government consumption is projected to rise by 0.9 percent this year and by 1.9 percent next year after growing by 1.6 percent in 2016.

Export expected to be strong, with surplus

It is also expected that Slovak exporters will continue gaining market share, making it possible to post a modest surplus. Exports of goods and services are envisaged to rise by 6.8 percent this year and by 7.1 percent next year after recording a 4.8-percent rise last year.

Imports which expanded by 2.9 percent last year are expected to pick up and grow by as much as 6.8 percent both this year and next.

After falling by 0.5 percent in 2016, consumer prices should reverse the trend and resume growth this year. According to the OECD's expectations, the Harmonised Index of Consumer Prices (HICP) is set to go up by 1.6 percent this year and by 2 percent next year.

Public finances improving

The public finance shortfall is projected to fall from 1.7 percent of GDP in 2016 to 1.2 percent this year, and go all the way down to 0.6 percent in 2018. Public gross debt should decrease as well – from 59.1 percent of GDP in 2016 to 58.8 percent in 2017 and to 57.3 percent next year.

Government debt according to the Maastricht definition – which was at 51.9 percent of GDP last year – is also believed to be heading downwards; to 51.7 percent of GDP this year and to 50.2 percent in 2018.

In a bid to maintain the soundness of public finances, the Slovak government is planning to achieve a balanced budget in 2019, noted the OECD. To cover expenditures stemming from reforms aimed at enhancing inclusiveness, the government ought to improve tax collection and enhance public sector efficiency.

Topic: Economics

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