Subsidied energy prices is one of factors supporting household consumption in Slovakia. (source: TASR)
The Slovak economy has withstood the impact of Russia’s war on neighbouring Ukraine and the energy crisis better than expected, avoiding recession – unlike its regional neighbours. But that resilience will be tested in 2024 amid a slowdown in the global economy and an expected fall in private and public consumption. The baseline scenario assumes the economy will maintain positive, albeit slow, growth of under 2 percent and broadly stable unemployment. Inflation will fall to single digits but interest rates will remain high, challenging the private sector’s appetite for investment.
Looking at events in 2023…
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Amid the continuing malaise elsewhere in Europe, the Slovak economy was surprisingly resilient through the beginning of 2023 and avoided a recession which, conversely, plagued its key trading partners, Germany and the Czech Republic. In the first half of the year, thanks largely to the automobile industry, it expanded 1.3 percent year-on-year. Meanwhile, thanks to accelerated investments linked to EU funds in the remainder of the year, real GDP seems on track to post a full-year gain of about 1.7 percent.
