(Repeats story from late Wednesday)
By Peter Laca
BRATISLAVA, Feb 4 (Reuters) - Slovak economic growth will
slow down sharply to 2.4 percent this year, which will cut state
revenues and may boost the fiscal deficit, the finance minister
said on Wednesday.
Finance Minister Jan Pociatek said lower growth -- below
previously forecast 4.6 percent -- would curb budget revenues by
around 330 million euros, or some 0.5 percent of gross domestic
product (GDP).
The revised growth forecast was in line with prediction of
2.4-2.5 percent given to Reuters by a source on Tuesday.
Analysts said even the updated government prognosis might be
too optimistic and they saw a risk of a more painful fiscal hit.
Slovak economic growth slowed last year to around 7 percent,
from record 10.4 percent expansion in 2007.
Like many other European Union members, Slovakia has been
hit by the global economic turmoil as its export-reliant economy
suffers from the impact of weakening demand in its main western
markets, most notably Germany.
The euro zone newcomer should still maintain the fastest
growth pace in the single currency area, according to European
Commission forecasts, although a further deterioration in major
EU economies could put further pressure on Slovak growth.
"The Slovak economy depends massively on foreign demand, and
any setback at our main trading partners will obviously affect
us," Pociatek said.
He said the latest growth forecast did not include a
positive impact of planned highway projects financed through the
so-called public-private partnership (PPP) scheme, under which
private investors build and operate roads.
BUDGET HIT
Slovakia's leftist Prime Minister Robert Fico is already
trying to reshuffle some budget spending to free money for a 332
million euro economic stimulus package, but he does not want any
curbs in expenditure allocated for welfare programmes.
The government has said the public finance deficit may rise
above the ceiling of 2.1 percent of GDP approved in this year's
budget if revenues fall short of plan or if the cabinet needs to
spend more to support the economy.
But Pociatek reiterated on Wednesday the cabinet did not
want to let the public finance deficit grow above the limit of 3
percent of GDP set in the EU's Stability and Growth Pact.
"(Lower growth) will lower budget revenues. The impact is
still being analysed, but preliminary estimates are about 330
million euros," Pociatek said.
He said the government would seek savings on the expenditure
side to compensate for at least part of the revenue shortfall.
Jan Toth, the Chief Economist at UniCredit Bank in
Bratislava, saw even sharper slowdown in GDP growth this year
and stronger pressure on fiscal deficit.
Toth said UniCredit predicted a real GDP rise of 1.8 percent
this year because it expected a "bigger recession in industry"
compared with finance ministry estimates.
"The decline in industrial production will create negative
contribution to overall growth and will curb growth created by
domestic demand," Toth said.
(Reporting by Peter Laca, editing by Ron Askew)
