Slovakia Economic Forecast

Slovakia Economic Outlook

July 24, 2018

The economy is expected to have broadly kept pace in the second quarter, after recording solid growth in the first quarter on the back of robust domestic demand. As suggested by healthy expansions in retail sales in April and May, consumer spending held up well in Q2, underpinned by falling unemployment and robust wage growth. Moreover, external demand regained some steam in the first two months of Q2, after dragging on growth in Q1. At the same time, softening economic sentiment throughout the second quarter is consistent with a lackluster performance in the industrial sector against a moderation in economic momentum in the EU. Furthermore, some signs of overheating are coming from the credit sector. Against a backdrop of surging house prices and growth in lending, in early July the Central Bank decided to increase banks’ countercyclical capital buffers and tighten mortgage regulations. The measure will come into force in August 2019 and aims to squeeze credit supply and cool the real estate market.

Slovakia Economic Growth

Favorable financial conditions and robust inflows of EU funds should continue to support fixed investment, while a buoyant labor market and strong wage gains will underpin consumer spending going forward. The main downside risk stems from the possible imposition of car tariffs by the U.S.; conversely, a relocation of car factories from the UK to continental Europe could boost growth. Political instability, however, still represents a risk. FocusEconomics panelists project GDP will expand 3.7% in 2018, unchanged from last month, and 3.5% in 2019.

Slovakia Economy Data

20132014201520162017
Population (million)5.45.45.45.45.4
GDP per capita (EUR)13,70714,04914,55414,95715,648
GDP (EUR bn)74.276.178.981.285.0
Economic Growth (GDP, annual variation in %)1.52.83.93.33.4
Consumption (annual variation in %)-0.81.42.32.63.7
Investment (annual variation in %)-0.93.019.8-8.33.2
Industrial Production (annual variation in %)2.23.06.03.83.1
Retail Sales (annual variation in %)0.13.61.72.16.0
Unemployment Rate14.213.211.59.78.1
Fiscal Balance (% of GDP)-2.7-2.7-2.7-2.2-1.0
Public Debt (% of GDP)54.753.552.351.850.9
Money (annual variation in %)6.25.211.15.26.2
Inflation Rate (CPI, annual variation in %, eop)0.4-0.1-0.50.21.9
Inflation Rate (HICP, annual variation in %)1.5-0.1-0.3-0.51.4
Inflation (PPI, annual variation in %)-0.1-3.5-4.3-0.28.3
Policy Interest Rate (%)0.250.050.050.00.0
Exchange Rate (vs USD)1.381.211.091.051.20
Exchange Rate (vs USD, aop)1.331.331.111.111.13
Current Account (% of GDP)1.91.0-1.7-1.4-2.2
Current Account Balance (EUR bn)1.40.9-1.4-1.2-1.8
Trade Balance (EUR billion)4.24.73.33.63.2
Exports (EUR billion)64.264.767.770.075.1
Imports (EUR billion)59.960.064.466.471.9
Exports (annual variation in %)3.30.94.63.57.2
Imports (annual variation in %)2.30.17.23.18.3

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Slovakia Facts

ValueChangeDate
Bond Yield0.53-4.12 %Aug 15
Exchange Rate1.130.65 %Aug 15
Stock Market3310.0 %Aug 15

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