BRATISLAVA, October 2, (WEBNOVINY) — The Slovak economy will grow 2.3 percent this year, forecasts Ernst & Young in its autumn outlook for the eurozone despite the fact that over the first half of 2012 the country’s GDP grew 3 percent y/y, which is one of the best performances in the euro club. “Despite this encouraging performance the Slovak export-oriented economy will lose momentum because the sovereign debt crisis in the eurozone undermines regional demand,” said director of Ernst & Young Slovakia responsible for trade and consulting, Marian Capay.
According to him, despite the expected slowdown of the pace of the Slovak economy by one percentage point, it will still be a relatively high growth rate compared with other European countries. “In 2013 it will probably remain at the same level because the expected slow revival in the eurozone continues burdening exports and output and in 2014-2016, following a more significant revival of exports the gross domestic product will likely grow by four-percent,” said Capay.
Weak external demand, which is depressing economic sentiment and leading to increased spare capacity, will weigh on investment in machinery and equipment this year. With lending conditions remaining tight despite low interest rates, we forecast growth in fixed capital formation to contract by 0.8 percentage points in 2012 from 5.7 percent last year, before picking up to grow at around 2 percent in 2013 and then 3.5 percent in 2014.
Earlier hopes that consumers might benefit from lower inflation have faded, with inflation remaining higher than expected due to oil and food price pressures. Despite the effect of indirect tax rises imposed in 2011 falling out of the calculations, Ernst & Young now expects inflation to average 3.5 percent this year, only a little below 3.9 percent reported in 2011. But the slowdown in economic activity seen in the coming quarters should result in a further fall in inflation to just below 3 percent in 2013.
SITA
