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Slovak central bank cuts growth outlook on eurozone drag

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(Globalpost/GlobalPost)

Slovakia's central bank on Tuesday cut back its 2013-14 growth forecast on flagging auto and electronics exports to the crisis-struck eurozone and weak domestic demand.

"We now expect the economy to grow by 0.6 percent this year and by 2.3 percent next year against the previously expected 0.7 and 2.8 percent," central bank chief and ECB governing council member Jozef Makuch told reporters.

"This year's growth will be driven exclusively by exports and foreign demand which bottomed out in the first quarter and is expected to recover moderately in the upcoming months," he added.

"In coming years, we expect growth to be more balanced -- not only driven by exports but also domestic demand as unemployment declines."

Auto and electronics exports to other eurozone members, especially Germany, dominate the Slovak economy.

Problems in several economies in central Europe have been exacerbated by weak activity throughout the European economy and notably in the eurozone.

In Slovakia, which joined the eurozone in 2009, domestic demand lost steam over the last year amid government spending cuts and tax rises designed to rein in the public deficit from 4.3 percent of gross domestic product in 2012 to under the EU's 3.0-percent ceiling this year.

Output expanded by a seasonally-adjusted 0.2 percent compared to 0.1-percent growth in the last quarter of 2012.

Last week, the International Monetary Fund said output would slow significantly to 0.6 percent growth this year after adding 2.0 percent in 2012.

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http://www.globalpost.com/dispatch/news/afp/130611/slovak-central-bank-cuts-growth-outlook-eurozone-drag