IFP Revises Its GDP Growth Estimate Down to 2.3 Percent This Year

Bratislava, September 18 (TASR) - Slovakia's gross domestic product (GDP) should grow by 2.3 percent this year, chiefly thanks to domestic demand, according to the latest macroeconomic prognosis published by the Finance Ministry's Financial Policy Institute (IFP) on Wednesday. GDP growth of 2.2 percent should follow next year, supported by drawing money from the recovery plan. In both cases the IFP revised its previous estimate from June downwards, by 0.2 percentage points (p.p.) and 0.4 p.p. (respectively). After the price shock subsides, people's real income should rise as much as by 4 percent this year, which will be reflected in household consumption. "Investment activity will shift to the private sector, but overall capital formation will stagnate due to a slower launch of drawing new EU funds," stated the IFP. According to the IFP, the acceleration of inflation will dampen household consumption next year, but the economy's recovery will by driven by exports. Subsequently, GDP growth will peak at 2.4 percent in 2026, chiefly thanks to the ongoing drawing of money from the recovery plan. Drawing of this money will end in 2027, causing growth to slow down to some 1 percent. In 2028 GDP growth should accelerate above 2 percent. Over the whole forecast period, we expect a slight overcooling of the economy due to the planned consolidation of public finances with the aim of debt stabilisation," stated the IFP. In line with the IFP prognosis, inflation in Slovakia will rise above 3 percent this year, with prices for the whole year going up by an average of 2.8 percent. Next year inflation should accelerate to 5.4 percent. ko/mcs