Slovakia: GDP growth records slowest increase since Q4 2020 in the first quarter
According to a second release, GDP growth edged down to 1.0% year on year in the first quarter (flash reading: +0.9% yoy), from 1.2% in the fourth quarter of last year. Q1’s reading marked the slowest growth since Q4 2020.
The downturn was broad-based, with private consumption, public spending, and exports all weakening, and fixed investment growth slowing. Household spending contracted 2.1% in Q1, marking the worst result since Q1 2021 (Q4 2022: +5.2% yoy). Public consumption dropped at the sharpest pace since Q2 2022, contracting 5.8% (Q4 2022: -3.3% yoy). Meanwhile, fixed investment growth fell to 5.7% in Q1, marking the worst reading since Q2 2022 (Q4 2022: +10.6% yoy).
On the external front, exports of goods and services plunged at the steepest rate in over two years, contracting 4.7% in the first quarter (Q4 2022: +3.0% yoy). In addition, imports of goods and services deteriorated, contracting 13.3% in Q1 (Q4 2022: +7.5% yoy), marking the worst reading since Q2 2020.
On a seasonally-adjusted quarter-on-quarter basis, economic growth was unchanged at 0.3% in Q1, compared to the previous period’s 0.3% growth. Q1’s reading marked the joint-worst reading since Q2 2022.
On the outlook, Marián Kociš from Erste Group commented:
“[Households’ savings] reached a historic low by the end of 2022, which indicated a weakening of household spending in 2023. However, Slovakia still has a chance to avoid a technical recession, as approximately EUR 5 billion of expected fiscal stimulus is set to come from EU funds (approximately 5% of GDP). The crucial factor will be the country’s ability to efficiently and promptly utilize these sources, mainly through the Recovery and Resilience Plan. “