OECD: Slovak economy will grow by 4 percent this year

This fast pace growth is expected to continue next year as well.

Economic growth, illustrative stock photoEconomic growth, illustrative stock photo (Source: AP/TASR)

The Slovak economy is growing at a fast pace, a trend that is expected to continue into the next year, the Organization for Economic Cooperation and Development (OECD) predicts.

OECD currently predicts the gross domestic product (GDP) will increase by 4 percent in 2018, and by 4.5 percent in 2019 after last year’s 3.4-percent expansion, the Sme daily wrote on May 30.

Better situation on labour market

The private consumption will profit from the improving situation on the labour market, according to OECD. The lack of labour will support salaries, and thus also inflation. This year, the boost of private consumption is estimated to grow by 3.6 percent while next year, it should increase by 4 percent. Government consumption should increase 1.8 and 1.9 percent, respectively.

The cabinet should continue consolidation, due to rapid growth, Sme quoted OECD. It is necessary to make the public sector more effective, which would enable it to finance structural reforms.

Measures to make education and better inclusion of Roma more efficient are important, which would increase prosperity, inclusion and growth sustainability.

Speed-up of inflation predicted

OECD predicts a swift acceleration of inflation. Harmonised prices should grow this year by 2.5 percent, and next year by 2.4 percent after a 1.4 percent increase last year.

The growth of export will accelerate abruptly; it should rise by 8.5 percent and 8.8 percent after a 4.3-percent rise in 2017.

The Organization also counts on the decline in deficit, as well as public debt. The public finance deficit should decrease in 2018 to 0.8 percent of GDP, and next year to 0.3 percent of GDP.

In 2017, it amounted to 1 percent of GDP, the daily quoted the OECD. The public debt will decline from 58.4 percent of GDP to 57.5 percent of GDP or 55.6 percent of GDP, respectively. According to Maastricht criteria, it will fall from 50.9 percent of GDP to 49.9 percent of GDP, or 48.1 percent of GDP.

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