Slovakia may miss its goal of squeezing the budget deficit below the European Union’s limit as early as this year as a slowing economy reduces tax revenue, according to a European Commission forecast.
The EU’s Brussels-based executive arm projects the gap to reach 3.3 percent of gross domestic product this year and 3.4 percent in 2014, it said in a report released today. Public debt will gradually increase to 57.1 percent of GDP in 2014 from 43.3 percent in 2011, it said.
The fading effect of new production capacities in the car industry, consumer spending hurt by rising unemployment and government austerity measures will cause economic growth to ease to 1.1 percent in 2013 from an estimated 2 percent last year, the commission said. The slowdown makes it more difficult for the eastern euro-area member to meet its commitment to cut its deficit below EU limit of 3 percent of GDP.
Private spending will start to recover in 2014, helping push economic growth to 2.9 percent, according to the forecast. Inflation is projected at 1.9 percent and 2 percent in 2013 and 2014, respectively, after 3.7 percent last year as elevated unemployment limits wage growth.