Macroeconomic prognosis by IFP: Slovakia will avoid recession this year

Last update: 07.02.2023 15:00

This year, the Slovak economy will avoid recession. This was mainly caused by capped energy prices and the drawdown of EU funds. GDP growth was 1.7% last year despite double-digit inflation. Investments, which were postponed during the pandemic, also contributed positively to economic development. 

GDP in Slovakia will continue to be on an upward trend this year, growing by 1.3%. The good news is that inflation is starting to gradually decline, which improves the growth outlook for the economy. Next year, the inflation will slow down to 5.3 percent and get back to two percent by 2026. According to our macroeconomic forecast, this will moderate the rise in food and goods prices and later in services.. In the coming years, the prices of fuel will even decrease.

A rising demand, supported by easing inflation and stabilised real household incomes, will contribute significantly to the dynamics of the domestic economy.  Up to half of the GDP growth should be provided by the Recovery Plan. The growth of real wages should also be positive. This means, that wages will increase faster than consumer prices. Utilisation of EU funds from the previous period, as well as finances from the Recovery Plan will help employment.

A negative risk is posed by potential further aggression of Russia in Ukraine, which could lead to a renewed increase in prices of agricultural products, energy and an additional spill-over into the prices of  goods and services.

The full forecast can be found here
 

Press Department
Ministry of Finance of the SR