BRATISLAVA, May 11, (WEBNOVINY) — In spite of a weakening of the eurozone as a whole, the European Commission has greater confidence in Slovak economy than six months ago. According to the latest spring prognosis, the EC estimates Slovakia’s economic growth at 1.8 percent, while in the previous prognosis it was only 1.1 percent. Brussels expects eurozone’s economy to contract by 0.3 percent, whereas in the fall prognosis it estimated a 0.5-percent growth. The EC has kept the prognosis of Slovakia’s growth next year unchanged at 2.9 percent.
If the commission’s expectations were fulfilled, Slovak economy would post the fastest growth among all eurozone members, and the fourth fastest pace among all EU countries. Brussels prognosticates a faster growth only to Poland of 2.7 percent, Lithuania of 2.4 percent and Latvia of 2.2 percent.
Deceleration from last year’s 3.3-percent growth to 1.8 percent this year will be the result of a slowdown in economic activity of main trade partners. “With an 80-percent portion of export to the common European market, where the activity will remain subdued, exports will growth slower than long-term trends suggest,” the prognosis states. Weak local demand will hamper Slovakia’s economic growth, too. Together with an expected recovery in the EU in 2013, exports and investments should grow, too, which should drive economic growth to 3 percent.
Economic growth should be accompanied with faster growth of consumer prices. While in the fall prognosis Brussels estimated Slovakia’s harmonized inflation at 1.7 percent, it now anticipates a 2.9-percent inflation. The inflation prognosis for 2013 has been revised downward from 2.1 percent to 1.9 percent.
The dynamics of employment growth should decelerate from 1.8 percent last year to 0.5 percent this year and 0.7 percent next year. Unemployment rate is expected to gradually decrease from 13.5 percent in 2011 to 13.2 percent this year and to 12.7 percent next year.
If the EC prognosis was fulfilled, Slovakia’s general government deficit this year would reach 4.7 percent of GDP, while the state budget law plans a 4.6 percent deficit. Without a change in policies, the deficit next year would rise to 4.9 percent, whereas Slovakia is committed to reduce it to 3 percent of GDP.
SITA
