Slovakia is set to meet the goal of reducing its budget deficit below the European Union’s limit next year amid one of the strongest economic recoveries in the region, the International Monetary Fund said.
The euro-region member is on track to trim the shortfall to 4.6 percent of gross domestic product this year and 2.9 percent in 2013, the Washington-based lender said today in a report following regular Article IV consultations. The government will need to enact more measures to ensure the stabilization of debt levels and reduce vulnerability to market shocks, the IMF said in the document.
Austerity measures planned by the government shouldn’t constrain growth, the fund said, projecting an economic expansion of 2.6 percent in 2012 and 3.3 percent next year. An intensifying of the euro-area’s debt crisis and an eventual loss of investors’ confidence in fiscal consolidation represent key risks for the economy’s outlook, the IMF said.
Slovakia, which adopted the euro in 2009, is growing at one of the fastest paces in the euro area, driven by exports from units of foreign manufacturers such as Volkswagen AG. (VOW) The growth has enabled Premier Robert Fico, who came to power three months ago on pledges to insulate poorer Slovaks from the impact of the crisis, to cut the budget deficit mainly through measures to increase revenue.
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