UPDATE 1-Slovak Fin Min sees higher GDP growth in 2007-agency

...

The Slovak economy should grow faster than expected this year and next, led by household spending and rising exports, Deputy Finance Minister Frantisek Palko was quoted as saying by SITA news agency on Monday.

The finance ministry expects gross domestic product (GDP) to grow by 8.1 percent in 2007, up from the previous forecast of 7.4 percent. It also revised 2008 GDP growth to 5.6 percent, from its original 5.2 percent forecast in November, Palko said.

"High economic growth will be driven by a combination of domestic and foreign demand, which is getting more important," he told SITA in an interview. "It (growth) will stabilise at around 5 percent in the next years."

Ministry officials were not immediately available to confirm the forecast.

Slovakia ranked among the world's fastest growing economies in the third quarter of 2006 with a record GDP growth of 9.8 percent.

Fast economic growth is expected to help cover some expenditure plans of Slovakia's new government under Prime Minister Robert Fico, who won a June 2006 election on promises to raise social spending.

Palko also said average consumer inflation was seen at 2.2 percent this year, down from the previous prediction of 2.5 percent. The ministry saw prices growing by 1.9 percent on average next year.

Inflation is Slovakia's key challenge ahead of euro adoption, planned for 2009.

[BRATISLAVA/Reuters/Finance.cz]