The IMF expects Slovakia’s economy to expand by only 0.6% this year, revising down its forecast from 1.4% in the April edition of its World Economic Outlook. The new forecast was announced by the head of the IMF mission to Slovakia, James John, quoted by Webnoviny.sk.

John explained the anticipated deterioration of the Slovak economy with the continual worsening of the external environment, adding that the IMF has also cut its economic growth outlook for Germany, Slovakia’s biggest trading partner. John said that Slovakia’s plans to cut its budget deficit to below EU’s ceiling of 3% of GDP this year are achievable.

Slovakia’s finance minister Peter Kazimir admitted that the government would most likely cut its GDP growth outlook from the current forecast of 1.2%. He added that even with a growth of 0.6%, as predicted by the IMF, the end-2013 deficit target of 3% is still reachable.

Slovakia's budget posted a deficit of EUR 1.6bn at the end of May 2013, shrinking 26% compared to the EUR 2.16bn shortfall recorded at the same time last year, as budget expenditure fell faster than revenue. Five-month budget spending dropped 11% y/y to EUR 5.77bn, while revenue contracted 3.7% y/y to EUR 4.17bn.

The IMF has recommended Slovakia to improve tax collection, introduce a debated property tax, and enhance the efficiency of public spending. It has also urged the government to support the labour market through improvements in the education system and the implementation of active labour market policies.