Third wave slows economic growth (September 2021)

The third wave of the pandemic will hinder Slovakia's economic recovery, with output projected to grow by 3.7 per cent in 2021. Household consumption will decrease towards the year-end and the revival of the labour market will be postponed. At the same time, the pandemic's impact on output and employment will be somewhat milder than it was at the end of 2020. The imbalance between supply and demand and the resulting higher inflation will also curb real economic growth. In 2022, output growth will increase to 4.2 per cent, owing mainly to investments from the EU's Recovery and Resilience Plan, while private consumption too will recover. Growth will culminate in 2023 with the last-minute drawing of resources from the EU's current programme period. In the alternative scenarios, we consider the economic impact of a new lockdown, as well as the effect of EU funds being drawn below expectations.