Country Outlook - Main report: March 1st 2009 | |
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Slovakia: Country outlook
COUNTRY VIEW
FROM THE ECONOMIST INTELLIGENCE UNIT
OUTLOOK FOR 2009-10
• The Economist Intelligence Unit's central forecast is that the government will survive throughout the forecast period. However, tension between the ruling parties could cause the coalition to break up during this time.
• If the government were to break up, an early election would be the most likely outcome. This could allow Direction-Social Democracy (Smer-SD), the party of the prime minister, Robert Fico, to strengthen its position further.
• In the short term the government is likely to focus on alleviating the impact of the economic slowdown.
• Most of the previous government's free-market reforms should remain in place. However, a sharper economic slowdown and a drop in popularity could increase the government's incentives to reverse these reforms.
• GDP growth is forecast to slow to 1.5% in 2009, as tighter lending conditions reduce domestic demand growth, and as recession in parts of the EU curtails export expansion. Growth should accelerate a little in 2010, as the outlook for exports remains comparatively subdued.
• The current-account deficit is forecast to narrow as a share of GDP in 2009-10, compared with 2008, as energy prices fall and income debits moderate.
DOMESTIC POLITICS: Slovakia is ruled by a coalition comprising the centre-left Direction-Social Democracy (Smer-SD) of the prime minister, Robert Fico; the populist People's Party-Movement for a Democratic Slovakia (LS-HZDS),...