Slovak economy to grow more than predicted in 2016 & 2017

The Slovak Central Bank (NBS) increased its estimate of the country's GDP growth for the past year by 0.2 percentage points up to 3.5 percent year-on-year, TASR learnt from an updated medium-term forecast released by NBS. Additionally, the bank changed its estimate for 2016 from 3.1 percent to 3.2 percent. In 2017, GDP should grow by 3.3 percent, which represents an improvement of 0.1 percentage points compared to the previous prognosis. As explained by NBS Deputy Governor Jan Tóth, the change in the prognosis was motivated by low oil prices, among other factors. It's estimated that the oil prices should fall by 29 percent year-on-year in 2016 and a further 23 percent in 2017. Another significant factor should be the arrival of UK carmaker Jaguar Land Rover to Slovakia, as well as expected voluminous public investments related to the drawing of EU funds. "The low oil prices should be a positive factor for the eurozone economy. On the other hand, there's a negative effect represented by China, which is important for Slovakia via Germany. These effects will be neutralised mutually, however, so foreign demand will remain unchanged", said Tóth. Meanwhile, NBS has revised its estimates for inflation downwards. According to an updated prediction, inflation should reach 0.4 percent in 2016, while in December it was forecast by NBS to be 0.7 percent. "An acceleration of inflation has thus been postponed to 2017", said Tóth, adding that it may reach 1.8 percent. Real wages should increase by 3.3 percent year-on-year in 2016 and by 2.1 percent in 2017. Back in December, the estimate for 2016 was at 2.9 percent.