Slovakia’s economic outlook seems bright this year

The country’s GDP growth is expected to accelerate, mainly due to household consumption, exports and private investment.

Car production is important puller of Slovak economy, illustrative stock photoCar production is important puller of Slovak economy, illustrative stock photo (Source: Sme - Jozef Jakubčo)

Slovakia’s GDP growth will accelerate to 4.2 percent this year, driven chiefly by household consumption, exports and private investment, the latest macroeconomic prognosis published by the Finance Ministry’s Financial Policy Institute (IFP) foresees.

This growth will be built on two pillars: along with ongoing household consumption, it will be based on exports, benefiting from positive growth prospects in Europe as well as from expanded production at the Bratislava-based carmaker Volkswagen Slovakia.

Carmakers are economy’s powerhouses

IFP expects investments to speed up from the previous year, primarily thanks to an investment by carmaker Jaguar Land Rover and the launch of construction work on the Bratislava ring road. Meanwhile, public spending will rise only slowly, thus dampening the economy’s current tendency to overheat, the TASR newswire wrote.

In 2019, the economy should grow at an even faster pace thanks to the launch of new production in the automotive sector. IFP predicts next year’s GDP growth to be at 4.5 percent. Fuelled by exports, it will benefit from positive foreign developments and the start of production at the Jaguar Land Rover plant. Household consumption will maintain its stable growth rate of above 3 percent, while investment will decelerate due to the completion of major automotive investments.

Slovak labour market to grow, too

The labour market shall keep growing significantly this year, with employment going up by 1.7 percent, the Finance Ministry expects. The economy will see almost 40,000 new jobs, with the market services sector providing more than half of them.

The number of Slovaks working abroad should decline, while the number of foreign workers on the Slovak labour market will grow. The unemployment rate is predicted to stand at 7.3 percent this year. The average nominal salary will grow at its fastest rate since the beginning of the economic crisis, and will exceed €1,000 per month, TASR wrote.

Next year, growth in the average nominal salary should accelerate to 5.4 percent.

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