Consolidation shaping Slovakia‘s economic outlook

Erste Bank Research Team Erste Bank

A key theme that will influence all macroeconomic indicators in the coming years is fiscal consolidation. The focus is primarily on generating new revenues, which will significantly affect economic growth and inflation rates in the country. We project year-on-year GDP growth of 2% in 2025, driven mainly by household consumption. Due to consolidation efforts, our estimate has been revised downward by 0.5 percentage points.

We forecast an average inflation rate (CPI) of 4.6% in 2025, approximately 1.5 percentage points higher than the original estimate, primarily due to increased VAT and higher costs for businesses. A potential downside risk is the newly announced energy assistance, but its details and scope remain unclear.

Overall, the consolidation plan comprises 17 measures totaling €2.7 billion. The Ministry of Finance expects the 2025 deficit to reach 4.7%. Rating agencies have assessed the government's efforts as sufficient, though their successful and realistic implementation will be critical. Increasing concerns about relationships with the EU and institutions are becoming more prominent in rating evaluations.

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Erste Bank Research Team

Erste Bank

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