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Revision of the Medium-Term Forecast (MTF-2012Q4R) – Summary

In January 2013, Národná banka Slovenska (NBS) revised the NBS Medium-Term Forecast published in December 2012 (MTF-2012Q4). This is the first time that NBS has revised its quarterly MTF outside the official forecasting process; it did so as part of its activities related to the Committee for Macroeconomic Forecasts, which under the new Constitutional Act on Fiscal Responsibility is required to produce a macroeconomic and fiscal forecast by 15 February. Consequently, NBS is to publish a revised forecast providing professionals and the wider public with an updated outlook for economic developments in Slovakia. The revised forecast takes into account the most recently published national accounts statistics (composition of GDP for the third quarter of 2012 and labour market data) as well as monthly data from October and November 2012. The latest developments in external demand are also taken into consideration.

Two factors weighed particularly heavily on the revised forecast: first, moderately slower growth in external demand has dampened export growth; second, worse than expected indicators for the domestic economy resulted in a downward revision of the economic growth forecast for 2013 and 2014. The general trends have not changed since the release of MTF-2012Q4, and therefore the forecast continues to be predicated on a recovery of confidence and gradual acceleration in external demand from the second half of 2013. Following a temporary slowdown in 2013, economic growth is expected to pick up again in 2014. The labour market in 2013 is expected to continue reflecting adverse developments in employment, since economic growth will not be sufficiently robust to generate net employment. Nevertheless, with both external and domestic demand recovering during the course of 2013, it is assumed that employment will increase slowly and that the unemployment rate will gradually decline. Looking at price developments, no significant revisions have been made over the projection horizon and inflationary pressures are slightly lower.

The macroeconomic outlook has deteriorated since the December forecast. The projection for Slovakia’s economic growth remains at 2.4% in 2012, and has been revised down to 1.3% in 2013 and 3.3% in 2014. The annual inflation rate is assumed to decelerate from 3.7% in 2012, to 2.2% in 2013 and 1.9% in 2014. In the revised forecast, the risks to the economy projections are balanced in 2013 and remain on the downside in 2014. The most significant risk factor is the possibility that additional fiscal consolidation measures will be adopted in Slovakia and the euro area (not including Germany). No significant risks to the inflation forecast were identified.

The cut-off date for the data used as the basis for this forecast was 21 January 2013.

Petra Pauerová
Spokesperson of the NBS

National Bank of Slovakia
Press and Editorial Section
Imricha Karvasa 1, 813 25 Bratislava, Slovak Republic
Tel.: +421-2-5787 2142, +421-2-5865 2142, +421-2-5787 2169, +421-2-5865 2169

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