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2021/09/13 / Erste Group Research

High GDP growth encouraged by domestic demand

In the second quarter, GDP performed below expectations, rising just 2% q/q. Contrary to the previous quarters, the most significant impulse came from the domestic side, while the contribution of foreign demand was only marginal. Industry remained in relatively good shape, despite supply-side problems associated with the lack of car chips, while activity in services improved, due to the better pandemic situation. Considering the low willingness of the population to get vaccinated, the upcoming third wave of COVID-19 could threaten the economic recovery.

Inflation should reach 2.4% on average in 2021 before accelerating to 2.8% in 2022. The unemployment rate reached 6.9% in 2Q21, likely declining further during 3Q21, thanks to the economic rebound and improved activity in services. The full-year average is expected at 7.0% in 2021 before declining to 6.0% in 2022. The fiscal deficit budgeted for this year is unlikely to be reached, as the created pandemic reserve may be considered too big. We expect the deficit to reach 6% of GDP this year.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusSlovakia
Currency in focusEuro
Sector in focus-


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