Spectator on facebook

Spectator on facebook

IFP: Slovakia’s convergence with EU economy slower than before crisis

It was significantly affected by a massive increase in Ireland’s real GDP.

(Source: Sme)

Slovakia continues to converge with the EU economy, albeit at a slower pace than before the economic crisis that erupted almost a decade ago, the Finance Policy Institute (IFP) think tank running under the Finance Ministry wrote in its analysis.

The IFP highlighted the difference between the real GDP growth in Slovakia and in the EU and the eurozone.

“The convergence stagnation at 77 percent of the EU-28 level is only the result of the statistical imperfection in measuring the price level via the purchasing power parity,” writes the IFP. “Medium-term, the dynamics of the purchasing power parity should become harmonised with the GDP deflator.”

It added that the deceleration in convergence trends is due to different methodologies used in measuring the price level in Slovakia.

Based on the GDP deflator, the price level in Slovakia vis-a-vis the eurozone fell by almost 4 percent in the past three years. Meanwhile, according to the purchasing power parity, the prices in Slovakia and the eurozone grew roughly at an equal pace in the same period.

The IFP also pointed out that Slovakia’s convergence model involving the growth of nominal incomes at the same pace as elsewhere in Europe, but with slower inflation, isn’t sustainable long-term. Instead, it’s expected that inflation in Slovakia will accelerate along with the economy’s nominal performance and the re-emergence of the Balassa-Samuelson effect.

It should be noted that Slovakia’s convergence on the EU was significantly affected by a massive increase in Ireland’s real GDP for 2014-2015 – by 34 percent. If it hadn’t been for that, Slovakia’s economic performance compared to the EU would be at 78 percent, the IFP pointed out.

Top stories

Kiska: Saková is a wasted opportunity

But he has no other option than to appoint her as interior minister. Opposition and civic initiatives are also critical.

Denisa Saková met with President Andrej Kiska.

Slovak writer and film director Peter Krištúfek dies in a bus crash

The documentarist and writer, aged 44, was one of the two casualties of the fatal Monday crash between a bus and a truck.

Peter Krištúfek

OLAF began investigating the alleged abuse of EU funds in Slovakia

European Anti-fraud Office will look into fraud involving EU funds for Slovak agriculture first revealed by murdered Slovak journalist Ján Kuciak

Slovak agriculture faces many hard changes. Illustrative stock photo.

New lookout for plane spotters and photographers Photo

The lookout at the Bratislava airport is accessible from the Vrakuňa (borough of Bratislava) side.

Bratislava M.R. Štefánik airport's lookout.