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FinMin has revised Slovakia’s economic growth upwards for the next few years

Economic growth is expected to be driven mainly by growing household consumption as well as private investments

Prime Minister Robert Fico and Finance Minister Peter Kažimír(Source: SITA)

Slovakia’s GDP should grow by 3.3 percent year-on-year in 2017, before accelerating to 4.2 percent in 2018 and to 4.4 percent in 2019. The Slovak Finance Ministry published the latest economic forecast on June 19. While the 2017 outlook has not changed compared to a prognosis from February, the prospects for 2018 have improved by 0.2 percentage points. The 2019 prognosis has also stayed flat.

Slovakia’s economic growth in the period analysed by the Finance Ministry is expected to be driven mainly by growing household consumption, which should be the fastest since 2009, as well as private investments.

“Slovakia’s economy is doing well this year,” said Prime Minister Robert Fico (Smer) as cited by the TASR newswire. “It’s one of the highest growth figures ever. Meanwhile, the figures for 2018 and 2019 will exceed 4 percent. Mainly domestic demand and households are driving up this growth.”

The employment rate is expected to increase by 1.8 percent, with more than 40,000 new jobs due to emerge this year alone. The unemployment rate for 2017 should stand at 8.2 percent, and it should fall further to 7.5 percent in 2018 and to 6.9 percent in 2019.

Read also:FinMin downgrades growth forecast for this year

“I believe that we’ll reach historical lows when it comes to unemployment,” said Fico. “If this trend continues, we can talk about unemployment rates below 6 percent in two years.”

Based on the latest prognosis, nominal monthly salaries should increase by 4.6 percent in 2017 and by 4.8 percent in 2019. At the same time, inflation is forecast to stand at 1.3 percent in 2017, at 1.7 percent in 2018 and at 1.9 percent in 2019.

“Price increases will be moderated this year by decisions made by the [energy] regulatory authority earlier in the year,” said Finance Minister Peter Kažimír (Smer). “The relationship between salary growth and the prices of services and commodities is being restored. Inflation growth will be mitigated by an increase in nominal salaries.”

He added that the economic situation in Russia and China also appears to be improving, so there are no significant elements to disturb investors.

With growth exceeding 4 percent in the next two years Slovakia should become the leader in such terms among the Visegrad Four countries (the Czech Republic, Hungary, Poland and Slovakia), partly aided by the planned launch of car production by Jaguar Land Rover in Nitra.

“The economic growth structure is very sound and balanced,” said Kažimír, adding that Slovakia has also experienced a revival in domestic private investment.

As for risks, these mostly concern Brexit and possible developments in the banking sector in Italy, added Kažimír.

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