Ministry of Finance of the Slovak republic, Štefanovičova 5, 817 82 Bratislava, IČO: 00151742. www.mfsr.sk

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Inflation hits household's consumption (June 2023)

The Slovak economy has slowed down as a result of Russia's invasion of Ukraine and GDP is projected to grow by a modest 1.2 per cent in 2023. After the depletion of savings owing to inflationary shock, households will seek to replenish them decreasing their consumption. Despite that real disposable incomes and savings will rise slightly thanks to government measures. Consequently, number of employed people will rise as well. However, foreign demand will weaken, with recovery in European industry lagging behind services. The growth will be supported by EU funding, which will boost capital formation. In 2024, economic growth is projected to accelerate only slightly and real GDP will increase by 1.3 per cent. Economic performance will be dampened by budget consolidation efforts. However, global price pressures will ease and domestic inflation will fall below 5 per cent. In 2025, household consumption will recover and the export will catchiup on lost export market shares. The development of the war and the non-utilisation of EU funds remain risks to the forecast. Finally, as an scenario, we estimate the impact of a balanced budget on the economy.

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Ministry of Finance
of the Slovak republic

Štefanovičova 5
P. O. BOX 82
817 82 BRATISLAVA
IČO: 00151742

+421 2 5958 1111
podatelna@mfsr.sk

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