NBS Worsens Outlook for Slovak Economy, GDP Growth to Be Below 2 percent

Bratislava, March 25 (TASR) - Slovakia's central bank (NBS) has again issued a lower revised prediction for growth in the Slovak economy this year. In its latest (spring) macroeconomic prognosis published on Tuesday, the central bank expects GDP to grow by 1.9 percent this year, down from the 2.3 percent it predicted in December 2024. Inflation should be slightly higher as well, amounting to 4.3 percent, instead of originally forecast 4.1 percent. The deterioration is mainly the result of growing uncertainty in both the global and domestic economies. According to NBS governor Peter Kazimir, the ongoing uncertainty is already dampening both the European and Slovak economies. "The risk of trade wars, the persisting unpredictability of energy prices, our ongoing problems with competitiveness and geopolitical threats - all this increases the uncertainty regarding the behaviour of governments, firms, and households," he said. The central bank still expects price growth to be slightly faster this year and next. There are several factors behind this, said Kazimir. "There's the evergreen factor concerning energy prices and, last but not least, farm crops and food as such. The reduction of VAT in the sector of services has been reflected almost not at all, and so inflation in the sector remains surprisingly high," stated the governor. According to Kazimir, the demanding economic situation is even more complicated due to the impacts of a necessary consolidation of public finances, which must continue in the upcoming years as well. Another 'attack' on GDP growth will be the price of any form of this. "The financial markets believed our government's promise to continue with consolidation. On the other hand, this commitment is causing a certain headache in corporate sentiment and in the willingness to invest, as everyone is curious about what form the next belt-tightening packages will take. The government can contribute towards making macroeconomic developments more predictable with a clear and credible multi-annual consolidation plan, as well as a plan for household energy prices," stressed Kazimir. A piece of positive news, according to the governor, is NBS's expectation that, despite everything, the real incomes of Slovak households will grow in this and the next two years. ko/df