Slovakia Economic Forecast

After moderating in Q4 last year, our panelists expect annual growth to have lost speed again in Q1. In January–February, industrial production continued to contract, and compared to Q4, export growth decelerated and retail sales contracted at a slightly steeper rate. Inflation accelerated over the quarter, averaging above 15%, likely hitting private consumption. That said, both businesses and consumers became marginally less pessimistic. In politics, ahead of early elections on 30 September, Russia-leaning opposition parties have gained momentum and lead in the polls, boding poorly for the country’s support for Ukraine. In April, the government banned imports of grains and other farm products from Ukraine until 30 June, a move that will likely raise price pressures for food ahead.

Harmonized inflation moderated to 14.8% in March (February: 15.4%) due to lower price pressures for transport. Price pressures will moderate but remain elevated this year, with our panelists expecting average inflation to fall back into single digits by Q3. Oil and natural gas prices are key factors to watch.