BRATISLAVA, January 4, (WEBNOVINY) — Economic forecasts for this year count on a significant slowdown of GDP growth. The most pessimistic bank analysts even predict a recession, i.e., GDP contraction, in annualized terms. Slovakia was in a similar situation only recently when its economy contracted almost 5 percent in 2009. However, official prognoses released by the Finance Ministry, the National Bank of Slovakia and the European Commission (EC) still prognosticate growth. The central bank is the most optimistic with 2.3 percent, followed by the Finance Ministry (1.7 percent) and EC (1.1 percent).
In a December survey, bank analysts projected GDP growth at 0.7 percent for 2012. Some of them expected a 0.5-percent contraction. Regarding the forecasts for the whole of 2011, bank analysts anticipated 3-percent GDP growth. “Probably no one doubts the economic slowdown in 2012 at present. The reason is and will be global uncertainty and a slowdown of the global economy and of economies of our major trade partners,” Postova Banka analyst Eva Sadovska believes.
Given the current trends, Slovenska sporitelna analyst Sona Muzikarova does not assume that local demand could compensate for the shortfall in foreign demand. Local demand has been stagnating for two years, while consumption of households and public administrations continues shrinking on an annual basis.
“Question marks over the solution to the European debt crisis pose the most serious risks to Slovak [economic] growth in 2012. With regard to positive aspects, Slovakia should benefit from the relocation of production capacities from western Europe. This is true particularly for the automotive industry because car manufacturers are already expanding production or plan to do this year. Nonetheless, the relocation process is slow and gradual,” Muzikarova stated.
Sadovska does not think that potential negative aspects will be as strong as in 2009, when the Slovak economy contracted by nearly five percent due to the financial crisis and sinking global demand. Then again, sluggish economic activity anticipated for this year will likely afflict employment. The unemployment rate may climb above 14 percent from 13.3 percent projected for the whole of 2011.
SITA