Research Detail
| 2023/09/25 / Erste Group Research |
Headwinds from Germany, but EU resources will keep economy growing Looking at GDP growth, Slovakia experienced a successful first half of this year. However, the growth breakdown shows a slight disappointment. Not only did household consumption flip into negative figures, investment activity, expected to be the most important driver this year, was significantly weaker than forecasted. This suggests that Slovakia has been struggling to absorb the massive amount of financing coming from EU funds. The most prominent positive contributor was, surprisingly, foreign trade, driven by the car industry, with high positive trade balances. For now, we stick to our forecast of GDP growth at 1.5% this year. A disinflation period in Slovakia has started, as within a few months, the y/y inflation rate fell by more than 5pp below double-digit figures. Although the decrease has been caused mainly by a rising base from the last year, the slowdown in inflationary pressures is visible on a monthly basis. The pace of the decline in the coming months also depends on the secondary inflationary pressures induced by wage growth. For this year, we expect average inflation to be close to 11%. Even though the ECB seems to be (almost) done with rate hikes, the deteriorated fiscal stance in Slovakia may keep the DE-SK10 spread elevated. |
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General information
| Author | Erste Group Research |
| Date | 2023/09/25 |
| 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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