OECD keeps Slovakia’s 2013 economic growth outlook at 0.8%, cuts 2014 forecast to 1.9%

By bne IntelliNews November 19, 2013

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
  2013 2014 2015 2013 2014
GDP growth 0.8% 1.9% 2.9% 0.8% 2.0%
Private consumption 0.9% 1.0% 1.6% -0.5% 0.9%
Government consumption -0.5% -1.1% -1.1% -0.4% 0.6%
Gross fixed capital formation -7.7% 2.6% 2.8% 0.0% 2.1%
Exports growth 5.1% 5.6% 5.9% 2.7% 5.0%
Imports growth 1.8% 4.4% 4.6% 0.8% 4.3%
EU-norm inflation rate 1.6% 2.0% 2.1% 1.7% 1.6%
Unemployment rate 14.4% 14.2% 13.7% 14.6% 14.7%
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%
Source: OECD          

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