The economy of Slovakia has been characterised in the last two decades by explosive growth in exports as a share of GDP, driven by eurozone accession, strong foreign direct investment inflows and the country s rise as a regional manufacturing hub. Thanks to this, the economy proved resilient in the aftermath of the global financial crisis of ----. ...Household debt levels are moderate, and a healthy banking sector will support continued growth in mort- gages and consumer credit. Factors impeding stronger private consumption include structurally high unemployment, driven in part by labour market rigidities and stark regional disparities that will not be easily remedied in the coming years, as well as downward wage pressures owing to growing competition in export-oriented manufacturing sectors. Government Consumption: The Slovakian government has made considerable progress in the consolidation of fiscal ac- counts, and is one of few EU countries to have met the levels of fiscal balance (below -.- ) and public debt (below -- of GDP) required by the Stability and Growth Pact. ...Government Consumption: The Slovakian government has made considerable progress in the consolidation of fiscal ac- counts, and is one of few EU countries to have met the levels of fiscal balance (below -.- ) and public debt (below -- of GDP) required by the Stability and Growth Pact. The policy anchor of EU membership, as well as constitutional debt limits put in place by the government, will keep a lid on public consump- - Business Monitor International Ltd www.bmiresearch.com
...Source: European Commission tion growth, which we forecast to remain a small contributor to headline GDP in the coming years. Gross Fixed Capital Formation: Stronger levels of private consumption will lead to higher investment in domestically focused sectors in the coming years, helping to offset a decline in foreign direct investment (FDI) inflows and export-oriented investment. ...Gross Fixed Capital Formation: Stronger levels of private consumption will lead to higher investment in domestically focused sectors in the coming years, helping to offset a decline in foreign direct investment (FDI) inflows and export-oriented investment. Structural stability in the banking sector, as well as our outlook for a prolonged period of very low eurozone interest rates, means credit conditions will be supportive of corporate lending and fixed investment growth, and there is scope in particular for a significant ramp up in lending to small- and medium-sized enterprises. Low interest rates will support mortgage lending, and in turn the construction sector, which will also benefit in the coming years from a steady inflow of EU structural funding and the associated infrastructure projects. ...This means that FDI inflows will ease, historic rates of export growth will prove out of reach, and net exports will be a slight drag on headline GDP. After rapid growth in both the pre and post-crisis periods, exports as a share of GDP are nearing a peak.
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