Slovakia’s finance ministry revised up on Thursday (Sep 19) its 2013 gross domestic product (GDP) growth forecast to 0.8% from 0.5% expected in June on the back of improved outlook for exports given the recent favourable developments in the eurozone, its major trading partner. The improved economic growth forecast is also supported by better than expected developments in household consumption, which is now seen expanding by 0.5% this year, compared to a 0.7% contraction projected in June. Household consumption, which has been a major drawback to Slovakia’s export-driven economic growth in 2010-12, has been supported by improving consumer confidence and falling inflation, the finance ministry's think-tank Institute for Financial Policy (IFP) said. Household consumption increased by 1.5% y/y in Q2, posting its first annual growth since Q3 2009.
The expected annual growth in Slovak exports for 2013 has been upgraded to 4.8% y/y from 2.6% y/y, reflecting the economic recovery in the eurozone.
IFP maintained its growth outlook for 2014 at 2.2% and predicted economic growth to accelerate to 2.9% in 2015 and further to 3.1% in 2016.
The finance ministry noted that the improved 2013 growth outlook will have a favourable effect on the tax base, helping for the achievement of the government’s 3% budget deficit target.
|Forecast of main economic indicators, Sep 2013||2012||2013||2014||2013||2014|
|actual||current forecast||previous forecast|
|Real GDP growth, y/y||2.0%||0.8%||2.2%||0.5%||2.2%|
|Household consumption, y/y change||-0.6%||0.5%||0.8%||-0.7%||0.8%|
|Government consumption, y/y change||-0.6%||-0.7%||-1.2%||-1.9%||-0.4%|
|Gross fixed capital formation, y/y change||-3.7%||-5.8%||2.9%||-5.3%||3.5%|
|Exports of goods and services, y/y change||8.6%||4.8%||4.3%||2.6%||4.3%|
|Imports of goods and services, y/y change||2.8%||1.7%||3.3%||0.5%||3.5%|
|CPI inflation (average)||3.6%||1.6%||1.7%||1.7%||1.9%|
|Real wage, y/y change||-1.2%||0.9%||1.1%||0.3%||0.7%|
|Employment, y/y change||-0.1%||-1.0%||0.2%||-0.7%||0.4%|
|Unemployment rate (Labour Force Sample Survey)||14.0%||14.5%||14.3%||14.5%||14.2%|
|Trade balance (% of GDP)||5.0%||7.5%||7.5%||6.4%||7.1%|
|Current account balance (% of GDP)||2.2%||3.2%||3.5%||2.2%||3.0%|
|Source: Institute for Financial Policy|
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