Slovakia will avoid recession this year (February 2023)

As the euro area economy will avoid recession, Slovak GDP will rise by 1.3 per cent in 2023. The economy will be driven by domestic demand supported by the energy prices cap and the drawing of EU resources. The labor market will be resilient even though the dynamics of job creation will be moderate. Average inflation will ease to below 10 per cent leading to real wage stagnation. In 2024 and 2025, the Slovak economy is set for a recovery supported by stronger external demand. However, the duration of the energy prices cap will play a key role, as the government subsidies will expire and prices will have to match actual market values. Escalation of Russian aggression and the low Recovery and Resilience Plan funds drawings, which would cut off half of the economic growth this year, remain a risk to the development.