The Organisation for Economic Cooperation and Development (OECD) left unchanged its 2013 economic growth forecast for Slovakia at 0.8% in its latest Economic Outlook report published on November 19, saying that the country’s growth remained weak and unbalanced in the first half of the year mainly due to falling domestic demand, while exports were strong. Investments contracted in 2012 and in early 2013 due to the completion of large projects in the backbone automotive industry but private consumption rose for the first time following three years of decline due to higher incomes and improved consumer confidence, the OECD said.
The Slovak economy should gather pace in 2014 albeit at a weaker than previously thought rate thanks to stronger foreign demand that will boost investment and exports, especially in the auto sector. Private consumption will keep on rising but persistently high unemployment may weigh on recovery. Domestic demand will be dampened by the government's fiscal consolidation measures aimed at cutting the budget deficit to below EU's limit of 3% of GDP in 2014.
The OECD also said that Slovakia is vulnerable to global volatility as its economy is mainly exports-oriented and highly dependent on developments in the euro zone.
Slovakia's labour market remains weak as although employment stopped falling, 14% of the labour force is unemployed and two-thirds of them have been without a job for more than a year, the OECD said urging the authorities to strengthen active labour market policies and focus more on vulnerable groups in order to reduce structural unemployment.
|Slovakia, main economic indicators||Nov forecast||May forecast|
|Gross fixed capital formation||-7.7%||2.6%||2.8%||0.0%||2.1%|
|EU-norm inflation rate||1.6%||2.0%||2.1%||1.7%||1.6%|
|General govt balance, % of GDP||-3.0%||-2.8%||-2.6%||-2.6%||-2.2%|
|General govt gross debt, % of GDP||59.0%||61.4%||60.9%||58.8%||60.2%|
|General govt debt, Maastricht definition, % of GDP||54.6%||56.9%||56.4%||54.4%||55.8%|
|Current account balance, % of GDP||3.9%||4.5%||5.5%||2.1%||2.3%|
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