Real GDP growth is expected to remain modest at 0.8% in 2026, before picking up to 1.5% in 2027. Domestic demand is set to remain subdued due to fiscal consolidation and uncertainty related to the conflict in the Middle East, while EU funds support investment. Following the increase in tariffs in 2025, trade activity is expected to pick up only in 2027. Inflation is projected at 4.3 % for 2026, up slightly compared to 2025, as a sharp acceleration in energy prices broadly offsets disinflation in other components. Inflation is set to moderate to 3.2% in 2027. The public deficit narrowed to 4.5% in 2025 but is projected to rise to 4.6% in 2026 and further to 5.4% in 2027, assuming unchanged policies. As a result, public debt is set to remain on an upward trajectory.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 0.8 | 0.8 | 1.5 |
| Inflation (%, yoy) | 4.2 | 4.3 | 3.2 |
| Unemployment (%) | 5.4 | 5.7 | 5.7 |
| General government balance (% of GDP) | -4.5 | -4.6 | -5.4 |
| Gross public debt (% of GDP) | 61.4 | 63.7 | 66.9 |
| Current account balance (% of GDP) | -2.8 | -3.3 | -2.9 |
Growth stagnates due to uncertainty and fiscal consolidation
Following the subdued growth of 0.8% in 2025 on the back of uncertainty and fiscal consolidation, real GDP is expected to remain unchanged at 0.8% in 2026. Private consumption is expected to contribute negatively to growth, weighed down by fiscal consolidation and the fallout from the conflict in the Middle East through further uncertainty and inflation effects. Public and private investments are expected to support growth, and the deployment of EU funds is set to remain strong. Net exports showed resilience in 2025 and are set to contribute positively to growth in 2026 as imports grow only moderately. Exports are expected to be held back throughout 2026 due to global uncertainty and the exposure of the Slovak industry to trade tensions as a result of high integration in global value chains and increasing global competition.
In 2027, real GDP growth is projected at 1.5%, driven by rebounding private consumption and a rise in the contribution of net exports to growth. As foreign demand gradually picks up, export growth is expected to regain momentum in 2027, supported by the launch of a new automotive production factory. Public investments are expected to contribute negatively to growth as the RRF is coming to an end, while defence and private investments are set to increase. Private consumption growth is forecast to increase in 2027, although potential further consolidation efforts pose a downside risk to growth. Overall risks to growth are tilted to the downside across the horizon also due to the conflict in the Middle East.
Resilient labour market amid economic pressures
The unemployment rate reached 5.4% in 2025 as a decline in employment was largely offset by a shrinking labour force. The labour market remains tight with robust labour demand in specific sectors, alongside a high influx of foreign workers. In 2026, the unemployment rate is projected to increase to 5.7% as the labour market is expected to loosen somewhat due to weaker economic activity. Additionally, measures increasing the labour tax burden and a planned reduction in public wages are expected to weigh on disposable income. Growth in the employee compensation is expected to slow down in 2026. With elevated inflation levels, real wage growth in 2026 is expected to be slightly negative, returning to a positive trajectory in 2027.
Inflationary pressures to remain elevated
The HICP inflation stood at 4.2% in 2025 due to tax increases included in the fiscal consolidation package and strong price pressures in services. In 2026, tax effects are fading, and slowing wage growth is expected to ease services price pressures, while energy inflation is set to pick up strongly. The main driver behind rising energy prices remains to be the energy support adjustment of the full withdrawal of price ceilings for heating, and a partial withdrawal for gas and electricity. The impact of the conflict in the Middle East is reflected mainly through higher fuel prices since March 2026 and an expected passthrough to processed and unprocessed food components, while the effect on gas and electricity prices is limited as they are regulated by the government. HICP inflation is thus set to increase slightly to 4.3% in 2026, before moderating to 3.2% in 2027.
Deficits and debt to increase despite consolidation measures
In 2025, the general government deficit narrowed to 4.5% of GDP, primarily due to fiscal consolidation measures, including adjustments to VAT and corporate income tax rates, as well as the introduction of a financial transactions tax. The deficit turned out lower than anticipated, partly owing to reduced military spending. Despite a new consolidation package, the deficit is projected to rise slightly to 4.6% of GDP in 2026, reflecting a delayed delivery of military equipment from 2025. In 2027, the deficit is forecast to widen further to 5.4% of GDP under a no policy change assumption. This increase mainly stems from higher public investment in defence and national co-financing of EU-funded projects.
The 2026 fiscal consolidation strategy centres on a public-sector pay freeze as its key cost-cutting measure, alongside revenue-raising reforms. These include a more progressive personal income tax system, a 50% reduction in VAT deductibility for privately used company cars, and a one-off tax amnesty on historical arrears, which is expected to generate higher income tax revenues. However, the net fiscal impact of these measures will be tempered by new spending measures, particularly wage increases for teachers and the extension of energy support schemes.
The debt-to-GDP ratio for the government is forecast to continue rising, largely driven by the expected deficits, from 61.4% in 2025 to 63.7% in 2026, and climbing further to 66.9% in 2027.