Research Detail
| 2023/06/20 / Erste Group Research |
Net exports, EU funds play key roles this year Even at the beginning of this year, Slovakia continued on its growth trajectory. As expected, based on the real income decline and low savings, household consumption lost momentum, which, together with inventory creation, pulled the economy down. On the other hand, foreign trade and investment activity fueled the performance at the beginning of this year. The investment rebound was more than welcome, as EU funds are an important growth driver this year, bringing fiscal stimulus of around 5% of GDP. Fullyear growth could reach 1.5% in 2023. Consumer price growth moderated significantly in the previous months, falling below 12% y/y in May, caused mainly by a rising base from the last year. Although some inflationary pressures are gradually fading out, especially those coming from markets, secondary inflationary pressures induced by wage growth could be in the cards in the coming months. For this year, we expect average inflation to reach 12%, with downside risks. Elevated inflation in the EA forced the ECB into monetary tightening, with an impact on bond yields. We expect the DE-SK10 spread to narrow to 100bp at the end of this year. |
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General information
| Author | Erste Group Research |
| Date | 2023/06/20 |
| Language |  |
| Product name | CEE Country Macro Outlook |
| Topic in focus | FX, Macro/ Fixed income |
| Economy in focus | Slovakia |
| Currency in focus | Euro |
| Sector in focus | - |
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