BRATISLAVA, October 25, (WEBNOVINY) – Next year’s outlooks for Slovakia’s GDP growth continue worsening, according to bank analysts. In October’s round of the central bank’s regular poll, bank houses in Slovakia projected 2012 GDP growth at 1.9 percent in annual terms, down from September’s 2.7 percent or July’s 4.3 percent.
GDP prognosis for this year improved modestly 0.2 percentage points from September to 3.1 percent. Banks did not change the inflation forecasts. Harmonized inflation is projected at 4.3 percent and inflation measured in accordance with national methodology is expected to reach 4.2 percent. Analysts predict slower price growth next year, slashing HICP inflation outlook by 0.5 percentage points versus September to 2.7 percent. Also, they downgraded the forecast for inflation measured by national methodology by 0.4 percentage points to 2.7 percent.
Gloomy developments on global financial markets and feared downturn worldwide are already reflected in economic outlooks in Slovakia. The European Bank for Reconstruction and Development (EBRD) slashed the 2012 GDP growth projection for Slovakia from July’s 4.1 percent to 1.1 percent last week.
The Finance Ministry revised its prognosis of next year’s economic growth in late August, having cut the figure by 1 percentage points to 3.4 percent. The 2012 draft budget is based on this estimate. However, Finance Minister Ivan Miklos already admitted that GDP growth in 2012 may be even lower. His ministry pledged to issue a new prognosis in early November.
The National Bank of Slovakia also indicates potential economic deterioration in 2012. In the October issue of the Biatec magazine, the central bank admits that GDP growth in 2012 could reach 2.1 percent, which would be 1.7 percentage points less than the 3.8 percent predicted in September. “Flash indicators for the euro zone and Slovakia were disclosed after the completion of the current prognosis. They point to further downturn and may be the fulfillment of risks identified in the September outlook, quantified in the [alternative] scenario,” the NBS clarifies.
The central bank drafted the alternative scenario to estimate potential risks related to further economic downturn. The material works with an additional drop of foreign demand for Slovak exports, of some 5 % until late 2013. This would reduce exports and affect all components of local demand. The given sinking demand from abroad could slow GDP growth by 1.7 percentage points in 2012 and 0.9 percentage points in 2013. This scenario expects subsequent revival, not a slump into recession.
SITA