Macroeconomic Forecast Slovakia

We have revised up our forecast for joblessness in Slovakia this year to come in at 12.5%, up from 12.0%, bringing the average for 2011 to 12.5%, the same as in 2010. Our forecast revision was spurred on by June's unemployment rate reading, which rose slightly to 13.0%, from 12.8% the previous month. In our view, the domestic situation facing the labour market remains largely unfavourable, as the external environment becomes less supportive of Slovakia's export-led recovery. Moreover, the Slovak government's sustained fiscal austerity drive continues to weigh on employment. We expect the situation to improve in 2012, forecasting unemployment to fall to 11.0%.

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