Slovakia's central bank (NBS) has revised its GDP growth forecast for this year upwards to 0.8 percent and the forecast for inflation downwards to 3.6 percent, according to the latest autumn figures presented by NBS governor Peter Kažimír and central bank chief economist Michal Horvath at a press conference on Tuesday.
In June, the bank's projection for GDP growth amounted to 0.5 percent, with the one for inflation at 4 percent.
According to Kažimír, NBS is bringing two pieces of good news in its latest prognosis. "The first is that we are raising our forecast for GDP growth this year. The second is that we aren't downgrading our growth outlook for the next two years," he stressed. GDP is expected to grow by 1.9 percent next year and by 2.7 percent in 2028, which is almost unchanged from the figure that the bank forecast in June.
"The Slovak economy is therefore performing somewhat better than we expected in the summer, although it remains vulnerable and sensitive to developments both globally and at home. Households continue to spend, firms are investing more, and foreign demand for Slovak products is also developing more favourably, meaning that our exports are performing better as well. Government consumption should also be mentioned, as it's performing better than we had anticipated," said Kažimír.
According to the NBS governor, developments in the Slovak labour market are also encouraging. The labour market remains highly resilient, employment has stabilised, and salaries are rising faster than previously expected. For households, it's also important that lower inflation supports people's purchasing power.
This year, prices are developing more favourably than previously projected, mainly thanks to developments in food prices. However, the outlook for the coming years is more challenging. The central bank has raised its inflation forecast for next year to 3.1 percent and the one for 2028 to 3.8 percent.
"Much will depend on developments in energy prices, which are a key factor, but also on food prices, which have surprised the whole of Europe with their downward trend in recent months. Climate change will also play a role, as will the highly volatile geopolitical situation," said the central bank governor. He pointed out that higher energy prices are gradually feeding through into the economy as a whole, which is why it's important to remain cautious. The second reason is the high level of uncertainty in the global economy.
Source: TASR
