Economic Outline

Economic Indicators

Slovakia has experienced sustained and steady GDP growth since its integration into the European Union in 2004, except for the financial crisis of 2008-2009, the Eurozone crisis of 2011-2012, and the COVID-19 pandemic. After growing 1.7% in 2022, the Slovak economy decelerated to 1.1% in 2023 due to reduced private and public consumption accompanied by a decline in exports and imports, coupled with inventory reductions, reflecting the weakening economic prospects in its primary export markets (EU Commission). The economic growth outlook for 2024 and 2025 stands at 2.3% and 2.6% respectively. Real wage hikes are expected to bolster private consumption, offering an additional stimulus. Furthermore, the absorption of EU funds is anticipated to significantly contribute to investment growth (EU Commission).

In 2023, the general government budget saw a significant deterioration due to heightened social transfers, raises in public sector wages, increased interest rates, amplified military spending, and temporary measures to support energy schemes benefiting households and firms. The deficit was estimated at 6.5% of GDP by national authorities. The EU Commission raised concerns about the 2024 budget, projecting the deficit at 6.3% in 2024. Similarly, the debt-to-GDP ratio is on an upward trajectory according to Fitch Ratings, which expects it to rise to 62.1% by end-2025 from 57.8% at end-2022. Interest costs, however, are anticipated to increase gradually, attributed to a favorable redemption profile characterized by an average maturity of 8.5 years and predominantly fixed-rate debt structures. As per the EU Commission, inflation surged to 11% in 2023, driven by elevated energy prices and their subsequent influence on other components. In 2024, the inflation rate is projected to decrease to 3.5%, largely due to the anticipated moderation in energy and consumer food prices. However, the persistent effects of energy prices and a constrained labor market are expected to exert upward pressure on prices within the service sector. By 2025, inflation is forecasted to decline further to 2.6%.

The unemployment rate decreased to 6.1% in 2023 (from 6.2% one year earlier) and is expected to hover around 5.9% in the short term, while the labor market remains tight. Overall, around 15.6% of the population is at risk of poverty (especially in the eastern part of the country), less than the EU average of 21.6% (Eurostat, latest data available). The country’s GDP per capita (PPP) was estimated at USD 37,459 in 2022 by the World Bank, 31% below the EU average.

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