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| The EC's spring forecast predicts Slovakia to have the weakest economic growth within the V4 |
| Brusel, 20.05.2025 |
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| The European Commission's (EC) macroeconomic forecast on Monday indicated that Slovakia's GDP will grow by 1.5% in 2025, but expects GDP growth to slow to 1.4% in 2026. Slovakia will have the lowest growth among the Visegrad Four (V4) countries, reports TASR.
The Commission says that Slovakia's GDP will grow by 1.5% in 2025, as the export recovery slows down due to the direct and indirect effects of increased global protectionism. In addition, the government's fiscal consolidation is weighing on domestic demand. Growth will be driven mainly by private consumption, with public investments through EU funds and purchases of defense equipment.
Within the V4, the Czech Republic is expected to grow by 3.6% in 2025 and 2% in 2026. Hungary is forecast to grow by 3.4% in 2025 and 2.5% in 2026, while Poland is forecast to grow by 3.3% in 2025 and 3% in 2026.
According to the EC, inflation will increase to 4% this year due to increased taxes and higher wage growth, before easing to 2.9% in 2026.
It expects the public deficit to fall to 4.9% of GDP in 2025 thanks to the fiscal consolidation package, and to increase to 5.1% in 2026 due to spending combined with deteriorating macroeconomic conditions and the absence of new consolidation measures. According to the EC, the most important consolidation measures contributing to the reduction of the public finance deficit in 2025 include the adjustment of VAT and corporate income tax rates and the introduction of a financial transaction tax.
Slovak exports recovered only slightly in 2024 and will remain slow. Production in the automotive industry increased significantly, but some exports were suspended in response to the imposition of US tariffs. The risk of a decline in exports is posed by weaker economic performance in Slovakia's main trading partners. The Commission expects net exports to no longer contribute to growth, as increased imports will outweigh the benefits of exports.
Private consumption growth is expected to slow in 2025 due to the VAT increase in the first quarter and economic uncertainty. However, stable wage growth, keeping pace with the recovery in consumer price inflation, will provide additional stimulus to private consumption.
The use of the Recovery Plan funds through the Recovery and Resilience Facility (RRF) is set to increase in 2025 and 2026, supporting economic growth through public spending. However, the need for further consolidation poses a downside risk to growth in 2026.
The EC expects the unemployment rate to stabilise at 5.4% in both 2025 and 2026, but the labour market will remain tight with low unemployment, the highest number of vacant jobs and the highest presence of foreign workers. Overall, wage growth is expected to outpace inflation, leading to a modest increase in real wages.
The government debt-to-GDP ratio is expected to increase from 59.3% in 2024 to 60.3% in 2025 and to reach 63% of GDP in 2026, according to the EC.
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