Ernst & Young raises Slovakias 2012 GDP growth outlook to 2.5%.

By bne IntelliNews October 3, 2012
Global consultancy Ernst & Young has raised its outlook for Slovakia's 2012 economic growth to 2.5% in the edition of its Eurozone Forecast report from 1.7% projected in the report's summer edition, saying economic activity in the country was surprisingly solid so far this year with the GDP growing 3% in H1, showing one of the strongest performances in the eurozone. Slovakia's economic growth has been driven by exports, but domestic demand remained very weak, the consultancy noted. It added that Slovakia's export-driven economy would lose momentum by the end of the year, as the sovereign debt crisis in the Eurozone undermines regional demand. Ernst & Young projects Slovakia's GDP growth to slow down further next year, to 2.3%, as the expected sluggish recovery in the eurozone continues to weigh on exports and output. The country's economy is seen expanding by about 3% a year in 2014-16, helped by a stronger revival of exports. The slowdown in economic activity will also result in a further weakening in the labor market, Ernst & Young said. It forecast the worsening external environment to push the jobless rate higher in H2, to about 14.5%. The increased unemployment will result in lower household consumption, which is seen shrinking by 0.1% this year before rising by about 1% in 2013. "Earlier hopes that consumers might benefit from lower inflation have faded, with inflation remaining higher than expected due to oil and food price pressures," Ernst & Young said. It raised its inflation forecast for 2012 to 3.5% from previously expected 3.2%, while the 2013 outlook was increased to 3% from 2.3%.
Ernst & Young forecast (annual percentage changes unless specified) Autumn forecast Summer forecast Actual result
2012 2013 2012 2013 2011
GDP 2.5 2.3 1.7 2.1 3.3
--Private consumption -0.1 1.0 0.2 2.4 -0.4
--Fixed investment -0.8 1.8 1.8 1.6 5.7
--Stockbuilding (% of GDP) -1.6 0.2 -3.7 -3.7 -1.8
--Government consumption 0.0 1.8 0.4 1.9 -3.5
--Exports of goods and services 6.5 0.6 1.6 2.7 10.8
--Imports of goods and services 3.9 1.7 -2.1 2.7 4.5
Consumer prices 3.5 2.8 3.2 2.3 3.9
Unemployment rate (level) 14.1 13.9 14.7 13.5 13.6
Current account balance (% of GDP) 2.2 0.5 2 1.7 0.1
Government budget (% of GDP) -4.9 -3.8 -4.8 -3.9 -4.8
Government debt (% of GDP) -46.7 48.7 46.6 48.9 43.3

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