(Writes through with central bank forecasts)
By Peter Laca
BRATISLAVA, Feb 3 (Reuters) - Slovakia has cut forecasts of
2009 economic growth as it prepares to take a hit from the
global financial crisis, but the euro zone newcomer expects to
stay the fastest growing economy in the single currency area.
The Finance Ministry will present in February a reduced 2009
growth forecast of 2.4-2.5 percent, compared with the previously
expected 4.6 percent, a source with direct knowledge of the
draft update of the forecasts told Reuters.
The central bank said on Tuesday it had cut its own gross
domestic product (GDP) growth forecast for this year even more,
to a real 2.1 percent, from the previous 4.7 percent.
Like many other European Union members from central and
eastern Europe, Slovakia has been hit by the global financial
crisis as its export-reliant economy feels the impact of
weakening demand for its cars and TV sets in the West.
Slovak economic growth already slowed last year, with latest
finance ministry forecasts from November estimating full-year
gross domestic product (GDP) growth at 7.0 percent, compared
with record high rate of 10.4 percent in 2007.
"The new forecast should be 2.4-2.5 percent," the source
said, declining to elaborate.
Finance Ministry spokesman Miroslav Smal would not comment
on the new prediction.
The central bank said in a statement its new forecast was
based on the changed economic outlook since the official
quarterly prognosis was published in December, taking into
account mainly the deteriorating situation in Slovakia's key
export markets.
"Expected lower growth of imports of our main trading
partners... should negatively affect Slovakia's balance of goods
with a subsequent impact on balance of services," the central
bank said.
The government has said its growth prediction was likely to
be revised downwards, mirroring trends in other EU members that
have slashed forecasts amid deepeining global economic crisis.
If confirmed, the new 2009 GDP forecasts would be below the
European Commission estimate of 2.7 percent growth for Slovakia.
But Slovakia, a euro zone member since Jan. 1, should still
be the fastest growing economy in the single currency area and
the entire EU, the European Commission forecasts showed.
Lower economic growth will complicate fiscal planning for
Prime Minister Robert Fico as the 2009 state budget was based on
the assumption of a 4.6 percent expansion.
The leftist leader Fico has said the government would
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.
Fico and Finance Minister Jan Pociatek have 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.
Pociatek, however, said he did not want to breach the 3
percent deficit limit set in the EU's Stability and Growth Pact.
(Additional reporting by Martin Santa; Editing by Victoria
Main)
