The Slovak economy continues to recover from the pandemic-induced recession. Although weaker than expected in the spring, real GDP growth is forecast to reach 1.9% in 2022, and 2.7% in 2023. The aftereffects of the Russian military aggression against Ukraine are set to constrain economic growth over the forecast horizon. The recovery of industrial exports slowed down due to the weakening of global demand. A stronger-than-expected increase in consumption in the first quarter of 2022 was partially offset by strong reductions in investment.
Last update : Summer 2022 Economic Forecast (14/07/2022)
|GDP growth (%, yoy)||-4,4||3,0||1,9||2,7|
|Inflation (%, yoy)||2,0||2,8||10,5||8,2|
Despite rising consumer prices and elevated uncertainty, private consumption grew by 3.1% in the first quarter of 2022. A newly introduced package supporting families with children, combined with other government measures, should support higher consumer spending in 2023. However, the losses in purchasing power of households are set to keep a lid on private consumption growth.
Slovakia’s large export-driven industry sector remains constrained by supply chain disruptions and increasing prices of inputs. In addition, Slovakia’s main export markets are expected to grow at a slower pace. Both of these effects are set to reduce the contribution from export of goods to growth. At the same time, recovering consumer demand should lead to higher imports. In 2023, gradually easing supply constraints should support export growth.
Inflation continued to exceed expectations in the second quarter of 2022, driven by higher energy and food prices. Yet another sharp increase in regulated energy prices of natural gas for households is set to drive inflation to 8.2% in 2023, following a 10.5% increase in consumer prices in 2022. Food, service and industrial good price increases are expected to persist also in 2023 but at a slower pace than in 2022. Without alleviating measures for gas prices and an agreement on price freeze for electricity, inflation in 2023 could be significantly higher.