Country Risk Service Slovakia
The Economist Intelligence Unit, March 2013, Pages: 20
Slovakia is ruled by the centre-left Direction-Social Democracy (Smer-SD) in a single-party government. Real GDP growth is estimated to have slowed to 2% in 2012, from 3.2% in 2011, as more countries in the euro zone entered recession and external demand faltered. Following a further slowdown in 2013 (the Economist Intelligence Unit now forecasts growth of 1.3%), economic growth is forecast to accelerate from 2014 as domestic and external demand rebound, but it will be slower than in the boom years of 2004-07. Inflation measured by the EU harmonised index of consumer prices (HICP) remained elevated in 2012, at 3.7%. It is expected to moderate to around 2.4% per year in 2013-17, in line with fiscal retrenchment and gradual monetary tightening. The current account should remain in surplus throughout the forecast period as export growth remains strong and as Slovakia strengthens its position as a net exporter.
The four mainstream centre-right parties, now in opposition, are expected to support the government in its drive for fiscal austerity. They remain weak and fragmented and are unlikely to constitute an effective opposition in the near term. Smer-SD is expected to remain the most popular party for much, if not all, of the forecast period.
The state budget envisaged a deficit of 4.6% of GDP in 2012. The government has admitted that state budget revenue is again likely to fall short of its target in 2013 (of 2.9% of GDP). We expect more fiscal slippage in 2013-14, unless the government implements further deficit-reduction measures.
Country Risk Service Slovakia
Slovakia at a glance: 2013-17
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Sovereign risk
Current assessment
Positive factors
Negative factors
Outlook
Currency risk
Current assessment
Positive factors
Negative factors
Outlook
Foreign-exchange regime
Banking sector risk
Current assessment
Positive factors
Negative factors
Outlook
Generic risks
Political risk assessment
Economic structure risk assessment
Country risk
Overall country risk
Rating definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Central scenario for 2013-17: Political stability
Central scenario for 2013-17: Election watch
Central scenario for 2013-17: International relations
Central scenario for 2013-17: Policy trends
Central scenario for 2013-17: Fiscal policy
Central scenario for 2013-17: Monetary policy
Central scenario for 2013-17: Economic growth
Central scenario for 2013-17: Inflation
Central scenario for 2013-17: Exchange rates
Central scenario for 2013-17: External sector
Key risk indicators
Ratings summary
Quarterly indicators
International assumptions summary
Economic structure
Public finances
Exchange rates, interest rates and prices
Financial sector
Current account
External trade
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