Slovakia Politics March 2018

Slovakia

Slovakia: Political crisis unlikely to affect economic policy

March 26, 2018

On the second attempt, the Slovak president accepted on 21 March a list of ministers proposed by the new prime minister, Peter Pellegrini. The next day, he appointed the cabinet, putting an end to a deep political crisis that broke out in the first half of March following the murder of investigative journalist Ján Kuciak in late February and subsequent mass protests. Despite the temporary political instability, the economy’s buoyant growth should not be affected. As the new prime minister is a member of the ruling Direction – Social Democracy party (Smer-SD), and the coalition supporting the government is the same, economic policy is unlikely to change.

The political turbulence was trigged by Prime Minister Robert Fico’s resignation on 14 March. Fico had been under pressure following large protests against corruption, which had been triggered by Jan Kuciak’s murder in late February. Kuciak had tried to shed light on a network of alleged links between organized crime and Slovakia’s political world. His investigation unearthed connections between members of the Slovak government who were close to Fico and men linked to Italian organized crime, and he claimed European funds had been fraudulently managed.

On 15 March, the president gave Peter Pellegrini, the former deputy prime minister, the task of forming a new government and submitting a list of ministers. After rejecting a first list, the president accepted a second list and on 22 March appointed the new government. Key to the acceptance of the second list was the choice of Tomas Drucker, former health minister, as the new minister of the interior. Drucker is considered to be a competent manager, which will be essential for his supervision of the investigation into Kuciak’s murder.

Despite the temporary political instability, the economy’s strong performance should not be affected. Solid demand from the European Union will continue to underpin the industrial sector and spur fixed investment, which will also benefit from increased EU funds. Moreover, tight labor market conditions and solid wage growth should continue to support consumer spending.

FocusEconomics Consensus Forecast panelists expect GDP growth of 3.5% in 2018, which is unchanged from last month’s forecast. For 2019, the panel projects economic growth of 3.4%.


Author: Massimo Bassetti, Economist

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