Slovak National Bank remains optimistic

Wednesday 19.11.2008 (6 weeks ago)
Slovak Republic :: Property News


While much of the world has little reason for optimism during highly difficult economic times, the head of Slovakia’s central bank still has a smile on his face, and the fact that this East European nation is only weeks away from adopting the euro probably has a lot to do with it.

Ivan Sramko told journalists that Slovakia’s economic growth rate in 2009 would be “reasonable.” In fact, at an estimate rate of nearly 5 percent, growth will be higher than in any other European country. But Sramko hinted that it might make good sense for Prime Minister Robert Fico’s Smer coalition government to let the budget deficit increase slightly, in order to introduce measures that might stimulate the country’s economy.

Slovakia’s annual deficit is currently set at 1.7 percent of the GDP, but Sramko noted that letting it increase to around 2 percent might help keep the economy strong, even during deeply troubled economic times.

Fico has already indicated that his government might be willing to follow the same approach adopted by several other European governments; this would involve deficit spending, as part of a larger project aimed that helping the country’s economy through difficult times.

If done correctly, government spending can help to encourage consumer spending, it may provide assistance to important businesses and corporations and can also help keep unemployment down.

While Slovak officials had previously believed that the country’s growth rate will exceed 7 percent next year, it is now estimated that it will stand closer to 4.9 percent.

Although this might be disappointing to some, the current prognosis is still far better than the less than one percent growth being predicted for Hungary.

© Prime Asset Investments Ltd.

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