NBS: Slovak Economy Should Rise by 3.2 percent in 2016

The Slovak central bank/NBS (stock photo by TASR)

Bratislava, March 29 (TASR) – According to the latest mid-term prediction of the Slovak central bank (NBS), Slovakia’s economy should rise by 3.2 percent this year, by 3.3 percent next year and by 4.2 percent in 2018, TASR learnt on Tuesday.

Investments in the public sector increased significantly in 4Q15. “We can thus expect the investments to decrease in the beginning of this year. Strong domestic demand was supplemented by increased exports, mainly in the automobile industry. These developments should gradually mitigate,” stated NBS governor Jozef Makuch at a press conference in Bratislava on Tuesday, adding that it’s all related to the deceleration of developing economies, mainly that of China.

Slovakia’s economic growth should be invigorated by the growth of foreign demand, record low interest rates and investments in the next few years. The gross domestic product should go up by 4.2 percent in 2018 due to predicted rise in exports. “This should relate to the start of new production in the automobile industry with anticipated contribution of 0.7 percent to GDP,” explained Makuch.

Meanwhile, employment rates should also go up, with labour productivity rising as well. NBS expects favourable development in real income in 2016. Looking ahead, NBS foresees the unemployment rate dropping to 8.4 percent by the end of 2018, which translates to the creation of around 75,000 new jobs, with approximately half of them in commerce and services.

Makuch said that prices are still being influenced by low prices of energy, foodstuffs, imported goods and relatively weak increase in the prices of services. Consumer prices should drop by 0.2 percent in 2016, while they should increase by 1.3 and 1.9 percent in 2017 and 2018, respectively. “Risks of the price development concern the instability of the global situation, which might keep the prices of certain commodities at really low levels,” added Makuch.

Bank deposits of the non-state sector accelerated by 0.9 percent to 8.8 percent in 4Q15. The total amount of loans of this sector rose by 9 percent year-on-year. “Households kept on taking loans, mainly with the purpose to buy an immovable property,” stated the governor.

NBS suggests the Government should adopt structural measures for sustaining the health-care system, eliminating the barriers in the education system, improving of public services, addressing the regional discrepancies and completing the road infrastructure.