The Organization for Economic Cooperation and Development (OECD) assumes that the type of expansion of the Slovak economy will remain high in the next two years. A significant increase in capacities of the automotive sector will boost exports. Improving the labour market situation and robust investment growth, supported by favourable financial conditions and increased spending on European Union funds, will contribute to high domestic demand.
In its current forecast published in the World Economic Outlook, the OECD calculates with 4.3% increase of the Slovak gross domestic products (GDP) in the year 2019 and by 3.6% in 2020. In this year, it expects an increase of 4.1% over +3.4 last year. The slowdown in the expansion in 2020 will be in line with the external environment.
The rise in wages will accelerate inflation in 2020 to 3% from 2.7% in this and next year. Push on increase of wages will be due to lack of workforce. According to the OECD, the unemployment rate will be decreased to 6.7% this year from 8.1% last year. The decline should continue over the next two years – to 6.1% in 2019 and 5.5% in 2020.
The government’s plans for fiscal consolidation are in line with the requirements of the European Union, the OECD said, which predicts a gradual decline in the government deficit from 0.7% of GDP this year to 0.4% of GDP in 2019 and 0% of GDP in 2020 . Public debt should fall to 57% of GDP this year from 58.1% of GDP last year. In 2019 it will fall to 55.1% of GDP and to 53.2% of GDP in 2020.
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