Slovak Growth at Risk If Russia Sanctions Widen, PM Says

Wider sanctions by the U.S. and its allies against Russia would threaten to undermine Slovakia’s accelerating economic growth and may cut the pace of expansion “almost by half,” Prime Minister Robert Fico said.

The euro-area nation’s economy will grow 2.2 percent this year and 3.1 percent in 2015, the European Commission said in its spring forecast released today. Fico declined to specify the exact impact of potential further sanctions on Russia over the conflict in Ukraine, saying the government’s deliberations are confidential.

“We have been struggling for two years and we are getting results,” Fico told reporters in Bratislava, the Slovak capital. “Were the strictest sanctions to be imposed, economic growth would slow by almost one half.”

The escalation of clashes between the Ukrainian military and pro-Russian forces in the former Soviet republic are threatening the May 25 elections, raising odds the U.S. and the European Union will impose wider sanctions against Russian industries, including banking and energy. Such a move may hurt Slovakia as Russia is the country’s biggest non-EU export destination and supplies almost all Slovak gas and oil.

Slovakia’s economy will grow at the fourth-fastest pace in the 28-member EU next year, behind Latvia, Lithuania and Poland, according to the commission. The budget deficit will be 2.9 percent of gross domestic product in 2014 and 2.8 percent next year, the EU’s executive arm forecast.

The shortfall projected below the EU’s ceiling of 3 percent of GDP implies the country has met its fiscal commitments and should ensure an exit from the bloc’s excessive-deficit procedure, a monitoring program for budget offenders, Fico said.

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