NBS: GDP Should Grow by 2.5 percent and Prices by 5 percent Next Year

Bratislava, October 9 (TASR) - Slovakia's GDP should grow by 2.5 percent both this year and next, Slovakia's central bank (NBS) predicted in its latest (autumn) macroeconomic prognosis published on Wednesday. NBS thereby slightly worsened its estimate when compared to the summer prognosis. Inflation should accelerate temporarily from 3 percent this year to 5 percent next year before returning to lower levels. "If I was to summarise our autumn prognosis as to what awaits the people of Slovakia and our economy, I would probably use the following sentence - solid growth despite a strong headwind," NBS governor Peter Kazimir told a news conference on Wednesday. He pointed out that great uncertainty still rules the world, and the recovery of the economies of Slovakia's key trade partners is getting delayed. An inevitable and much needed consolidation of public finances is coming alongside this. "This will all temporarily dampen the performance of the economy and push inflation to higher levels," he stated. The central bank expects that support measures in the field of energy will fade to a certain extent next year, and their prices will largely reflect market developments. However, the good news is that this situation won't bring a decline in living standards in Slovakia, it won't 'cripple' the growth of the economy and the labour market will remain stable, said Kazimir. Real salaries should go up by 3.8 percent this year, while they should increase by 0.2 percent next year. If there were no consolidation, the GDP growth estimate for next year would be similar to the summer one, i.e. around 3 percent. "However, there's a need to say that with the absence of consolidation, the economy would face the risk of a lower rating, possible unexpected movements in government bond yields, etc. The fact that the consolidation package is coming reduces these risks to a great extent, but consolidation will, naturally, have its costs," said NBS executive director Michal Horvath. The central bank estimates the public finances deficit at 5.7 percent of GDP this year. If there were no consolidation, it would expect a slight decrease to levels of around 5 percent in the next few years, stated Horvath. After taking into account the approved package, the deficit should fall to the declared target of around 4.5 percent in 2025 and 2026. ko/df