Domestic Consumption To Buoy Growth

The Slovak economy is expected to continue outperforming its central European neighbours in 2008, with real GDP growth forecast to come in at 7.3%. We retain our core view that an acceleration in domestic consumption growth will offset a concurrent slowdown in export and capital investment growth, ensuring that the economy as a whole continues to expand at a robust rate. We caution though, that risks of overheating are building, with increases in wage growth and inflation a particular concern, especially as the central bank will be constrained from monetary tightening owing to the euro-adoption timetable.

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