BRATISLAVA, September 18, (WEBNOVINY) — The National Bank of Slovakia (NBS) has revised upward its estimate of economic growth for this year. In its latest prognosis released on Tuesday the central bank prognosticates this year’s economic growth at 2.7 percent, while in June it forecast 2.5 percent. The bank has revised downward the estimate for next year from the original 3.1 percent o 2.0 percent.
The central bank adds that this year’s economic growth is driven by the automotive industry, without which the economy would likely stagnate. The slight increase in the predicted growth is related in particular to a higher contribution of foreign demand, whereas internal demand continues to be subdued. A similarly strong increase in car production under the base effect cannot be expected next year, the central bank points out.
In the following years, the Slovak economy will experience weaker external demand, while internal demand should contribute to growth only moderately. NBS Governor Jozef Makuch commented at Tuesday’s news conference that with regard to the latest economic prognosis, continuing uncertainty and decelerated foreign demand, the overall economic growth outlook has been revised downward. The economy is expected to boost 3.5 percent in 2014 instead of the originally predicted 4.3 percent.
Even this revision might not reflect the reality, the central bank warns with regard to the prevailing negative risks. Among the risks is the potential deepening of the debt crisis in Europe and consequent drop of foreign demand, Makuch stated. Another risk is other than expected response of the economy to consolidation measures, which the central bank has included in its prognoses for the first time.
Consolidation is expected to cut 0.41 percentage points from economic growth next year and 0.25 points in the following year. The central bank included in the prognosis planned consolidation measures worth EUR 1.57 billion, while measures worth EUR 1 billion should directly affect economic growth.
In addition to economic growth prognosis, the central bank has revised its estimates of development of consumer prices and employment. Inflation should be faster this year as well as next year than predicted in the previous prognosis. The NBS has increased its prediction of harmonized inflation by 0.2 points to 3.7 percent in 2012 and by 0.7 points to 2.4 percent in 2013. The estimate for 2014 remains at 1.9 percent.
NBS has revised downward its outlook of employment growth from 0.4 percent to 0.2 percent in 2014. Next year, employment is expected to stagnate. Earlier, the central bank expected a growth of 0.6 percent in 2013. In 2014, employment growth should reach 0.6 percent, unlike the previously predicted 1 percent.
SITA