Slovak economy to grow owing to investments and export
Last update: 08.11.2018 14:04
Slovak economy will continue to fare well. This follows from the autumn forecast published by the European Commission today. According to the forecast, the Slovak economy is expected to growth by 4 percent this year and by 4.1 percent next year. At the same time, household consumption and investments can be labelled as the major growth drivers. Export, too, will dominate next year. The EC also announced positive news on the labour market.
Today, the European Commission (EC) confirmed its growth projection for the Slovak economy this year. In 2019, our economy is expected to grow by 4.1 percent. Household consumption will continue to drive the economic growth, accompanied by investments this year and export next year. For the first time, the Commission also provides a forecast for 2020, expecting slowdown of the GDP dynamics to 3.5 percent due to the decelerating foreign demand.
“The European Commission forecast confirms the sound structure of growth of our economy. In 2019 and 2020, Slovakia will be the third fastest growing economy of the Eurozone with a growth twice as fast as the average of the entire club. The outlook for the next two years is sound, also with a positive impact on the labour market,” Peter Kažimír, Finance Minister, said.
The EC repeatedly increased the employment outlook, too. At the end of the horizon, unemployment is expected to fall to 6 percent. Due to tensions in the labour market, the wage growth momentum is expected to exceed 6 percent both in 2019 and 2020.
According to the EC forecast, the growth of price levels will stand at 2.6 percent this year and next year. Although inflation has already peaked in the second quarter, it will remain higher in the next period, in particular due to wage growth.
The EC expects an almost balanced budget of the Slovak Republic by 2020. The 2018 government deficit is projected at 0.6 percent of GDP, falling to 0.3 percent of GDP in 2019. The EC forecasts a nearly balanced budget in 2020.
According to the EC, the deficit reduction will be enabled, in particular, by the continued positive economic development and mainly the strong labour market, which will generate additional revenue in taxes and contributions.
Additional revenue will be generated by the improved tax collection. According to the EC forecast, public expenditure will grow at a moderate pace, also taking into account the planned wage increase in the public sector, as well as several social package measures. According to the EC, the lower degree of utilisation of EU funds will be offset by the planned investment activities of self-governments.
According to the EC, the debt brake will fall more considerably below the sanction zones of the debt brake. According to the EC, the debt will drop to 48.8 percent of GDP in 2018, resulting in a fall below the lower limit of the national sanction zones of the debt brake. As regards 2019 and 2020, the EC expects further debt reduction, up to 46.4 percent and 44.2 percent of GDP. The Slovak Republic’s debt will be more than one third below the average debt of the Eurozone. Compared to the average of V3 countries, the Slovak Republic’s debt will be lower by nearly 5 p.p.
Ministry of Finance of the Slovak Republic