In 2017 Slovakia's economy should maintain the relatively rapid growth rate of 3.5 percent that it has achieved over the past two years, according to VUB bank chief analyst Zdenko Stefanides. He added that it will partly be strengthened by the launch of the Jaguar Land Rover investment project and growing consumer demand fuelled by high employment and wage growth.
Stefanides told the TASR news agency that the main threats to the economy would come from the external environment, including political uncertainty in Europe. He expects interest rates to remain at relatively low levels, but he doesn't foresee any further drop in interest rates.
The private sector should be the chief driving force of the economy. Corporate investment should increase, mainly in the automotive and energy sectors. In particular, Jaguar Land Rover's investment has the potential to boost the productivity of Slovakia's economy by over 2 percent until 2020. Mass construction projects will continue partly thanks to the lowest ever interest rates and the wide availability of mortgages. This should lead to further job creation and lower unemployment.
On the other hand, Stefanides also sees ways in which full employment could have negative effects on economic growth. Some companies, especially in processing and IT, are already complaining about a lack of qualified labour. Demand for professionals is greater than supply, he told TASR. This will push salary costs up and force some companies to cut back their production and investment plans. Workers will also start looking for higher salaries as inflation returns to positive figures.
