* 2009 GDP forecast cut to -6.2 percent
* GDP growth of 1.1 percent seen in 2010
* Positive risks to forecasts prevail
(Adds quote, details, background)
By Peter Laca
BRATISLAVA, June 15 (Reuters) - The Slovak Finance Ministry
expects the economy to shrink by 6.2 percent this year, a
radical revision from the previous forecast for growth of 2.4
percent, a ministry source said on Monday.
The finance ministry source, who spoke on the condition of
anonymity, said the updated forecasts saw 1.1 percent real
economic growth in 2010, a cut from the previous prediction of
3.6 percent.
The new forecasts, expected to be officially released on
Tuesday, were based on a "conservative approach", and positive
risks to the prognosis prevailed over negative ones, the source
said.
Slovakia has been hit by the global economic crisis which is
curbing budget revenues, pushing up unemployment rates and
fuelling public unrest in some ex-communist states.
The previous Slovak prognosis was published in February and
the finance ministry has since said economic contraction was
likely this year in Slovakia, a euro zone member since January.
"Because this prognosis will be the basis for the revision
of this year's budget, as well as the basis for preparing the
budget for next year, the finance ministry has opted for a
conservative approach, and positive risks prevail over the
negative ones," the source said.
The source added the ministry's forecasts did not include
projects that have yet to be realised, such as highway
construction financed through the public-private partnership
schemes. Possible negative risks to the prognosis lied chiefly
in external environment.
Finance Ministry spokesman Miroslav Smal declined to comment
on new forecasts.
The new ministry prediction is more pessimistic than the
Slovak Statistics Office's outlook for a 3.5 percent contraction
this year, and is also well below the European Commission's
expectation of a 2.6 percent drop.
Slovakia is registering a rapid slowdown in economic
activity because demand for its exports, mainly cars and
electronics goods, fades in the West and household consumption
crumbles as well.
The central European country of 5.4 million people had
record high GDP growth of 10.4 percent in 2007, and posted 6.4
percent expansion last year.
The finance ministry will now adjust this year's budget
outline according to new economic forecasts, and it should have
new fiscal projections ready next week, the source said.
Prime Minister Robert Fico, in power since 2006 on promises
to take better care of the poor, has been trying to juggle
shrinking budget revenues and a pledge to keep expanded welfare
programmes intact.
The government has had to abandon its original target of
public finance deficit at 2.1 percent of GDP this year because
of the economic downturn and it now wants to keep the gap within
the 3 percent limit set in EU's Stability and Growth Pact.
(Additional reporting by Martin Santa)
(Editing by Jan Lopatka and Victoria Main)
