Uncertainties abound, yet recovery is likely forthcoming in 2021

The COVID-19 pandemic determines economic development of Slovakia.

The COVID-19 pandemic as well as antipandemic measures affect the Slovak economy.The COVID-19 pandemic as well as antipandemic measures affect the Slovak economy. (Source: TASR)

Amidst the surging COVID-19 pandemic and threats of a lockdown in the coming months, the economic outlook is extremely uncertain. The first wave of the pandemic has already chopped off about 13 percent of the Slovak economy, throwing it back five years.

A post-pandemic rebound of the economy, however, is likely in 2021. In our baseline projection, the Slovak economy will grow around 5 percent in 2021 and by mid-2022 return to pre-COVID crisis levels of activity. Risks to the forecasts though are tilted toward the downside, owing not only to the unprecedented pandemic threat and its untested impact on global social behaviour and consumer spending, but also to political risks, including that of the UK leaving the EU in January without a deal.

Economic impact of the pandemic has been relatively contained

A year ago, the outlook for the Slovak economy foresaw slow but gradually improving growth in 2020 as previous drags on global trade started to melt away with the US and China beginning to sort their trade disputes. The hopes of global and Slovak growth recovering, however, were abruptly washed away in early spring as the COVID-19 pandemic made its way into Europe and the US.

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