BRATISLAVA, Jan. 30 (Xinhua) -- Hard Brexit could cause a 0.7-1.1 percent cumulative drop in the Slovak economy until 2023, mainly through foreign trade that might see a downtick, the Slovak Central Bank (NBS) predicted on Wednesday.
It is the uncertainty over the future arrangement of economic ties between the United Kingdom and the European Union (EU) that poses one of the most significant risks for economic growth. The NBS based its calculations regarding hard Brexit on figures supplied by the Bank of England.
According to the British calculations, hard Brexit would cause a cumulative drop in the United Kingdom's GDP by 4-7 percent until 2023, with the slower economic growth and the introduction of trade barriers likely to result in the reduction of EU imports by 12 percent, translating also into smaller exports by Slovak firms. "This negative effect on foreign demand for Slovak exports represents the main dynamics through which Brexit would influence the Slovak economy," the NBS noted. An indirect effect would be via other trade partners, due to the high level of the Slovak economy's involvement in global chains.
"In terms of trade barriers, which would restrict the mutual trade between the United Kingdom and EU under the WTO (World Trade Organization) regime, Slovakia ranks as one of the most affected countries in international comparisons," claimed the NBS.
The UK is the third biggest export partner of Slovakia after Germany and Czech Republic. Slovakia had reached a trade surplus with UK at nearly 3 billion euros (3.42 billion U.S. dollars) in 2017.
