Prices in Slovakia are expected to rise by approximately 8 percent this year and by 10-14 percent next year, Slovak Central Bank (NBS) governor Peter Kazimir reported on Wednesday, presenting the bank's new medium-term forecast.
This high inflation will be accompanied by a weakening of economic growth, which is expected to stand at 2-3 percent in the next few years. In the event of dramatic developments in the war in Ukraine, economic growth could even come to a halt next year, warned the NBS analysts.
Given the current situation full of uncertainty, the central bank has drawn up three different estimates for future developments. These include a war scenario, a dramatic war scenario, and, for comparison, a scenario with no war, as problems with inflation and an economic slowdown would have occurred even without the conflict in Ukraine.
"We assume that average inflation in Slovakia this year will stand at around 8 percent. Next year, 2023, we anticipate further inflation growth, depending on which scenario takes place, and it should range from 10 to 14 percent," calculated Kazimir, noting that such a rise in prices will also mean a decline in real salaries in Slovakia.
"We expect that our economy will grow between 2 and 3 percent in the next three years. If it comes down to the worst, a dramatic war scenario, economic growth could even stop next year," said Kazimir. The central bank estimated that the economic consequences of the war in Ukraine on Slovakia will range from 4 to 7 percent of GDP, or about €4-7 billion.
