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.

The processing of personal data is subject to our Privacy Policy and the Cookie Policy. Before submitting your e-mail address, please make sure to acquaint yourself with these documents.

Top stories

Yuri Dojc: I did not want to live under occupation

Slovakia is not even close to what I remember from my life here, says the Canadian-Slovak photographer.

Yuri Dojc today: "A reflection of an older man in the mirror with glimpse of an attractive woman , who is my wife"

We will not allow Ján and Martina to be forgotten

Statement from Slovak journalists half a year after the murder of Ján Kuciak and Martina Kušnírová

Illustrative stock photo

Our emigrants’ stories: lessons in humanity

Slovaks who fled the 1968 occupation tell us what it means to be a refugee.

Pictures from The Gift pantomime show. Milan Sladek wrote it in the Swedish Goteborg in 1969 as a metaphor of Czechoslovakia's cohabitation with the Soviet Union.

We were on the run, but we were welcomed Photo

Slovak-Swiss writer Irena Brežná was forced to emigrate but found a way to fill her life with meaning in a foreign land.

Irena Brežná arrives to Switzerland.