GDP in Slovakia

Slovakia - GDP

GDP growth plunges in the third quarter amid input shortages

A second reading confirmed that GDP growth moderated to 1.3% year-on-year in the third quarter from 9.6% in the second quarter, thus marking one of the weakest growth figures in the Euro area.

The downturn was broad-based, with private consumption, public spending, fixed investment and exports all weakening. Household spending increased 2.5% in the third quarter, which was below the second quarter's 5.0% expansion. Public spending contracted 1.0% in Q3 (Q2: +8.1% yoy). Meanwhile, fixed investment was down 1.9% in Q3, contrasting the 5.6% expansion recorded in the previous quarter.

Exports of goods and services fell 3.0% in Q3 (Q2: +39.3% yoy). In addition, growth in imports of goods and services waned to 3.5% in Q3 (Q2: +39.2% yoy).

On a seasonally-adjusted quarter-on-quarter basis, economic growth waned notably to 0.4% in Q3, following the previous quarter's 1.9% expansion.

Heading into Q4, a winter wave of Covid-19 bodes poorly for private consumption. Meanwhile, industry is likely to continue struggling amid persistent supply bottlenecks and high energy prices. That said, a falling unemployment rate should support spending somewhat.

Analysts at Erste Bank highlighted the contrasting performances of the domestic and external sectors in Q3:

“The economy performed below expectations. […] A positive impetus came from domestic demand, while the contribution of net foreign demand remained negative, mainly due to lower exports triggered by the lack of inputs in industry. The summer season and improved pandemic situation supported economic activity in contact-intensive branches. However, the ongoing third wave of the pandemic, the persisting supply chain problems in industry and rising prices may threaten the economic recovery in the coming quarters.”

FocusEconomics panelists see the economy growing 4.4% in 2022, which is down 0.2 percentage points from last month’s forecast. In 2023, the panel sees GDP growth at 3.9%.