Slovakia: Economic growth in times of heightened uncertainty

The Slovak economy entered 2026 with subdued growth. Household consumption increased only moderately, while investment disappointed with a sharp decline. For the year as a whole, we expect economic growth to remain close to 1%. Risks stem mainly from the external environment, including trade tensions, geopolitical uncertainty, and developments in energy prices, but also from domestic factors, particularly the consolidation of public finances. Conversely, growth will be supported by the need to draw down the remaining funds from the Recovery and Resilience Plan.

Inflation remains elevated. In our 2026 forecast, we expect average inflation to reach 4%, before slowing towards 3% in 2027. Price developments are being influenced mainly by services prices, energy, the January increase in heating prices, and still relatively strong wage growth.

The labour market is gradually cooling, as the subdued economy is not generating sufficient demand for labour. Unemployment rose to 5.9% in the first quarter and could approach 6% on average for the full year. The greatest pressure is likely to be felt in industry, which is facing weaker demand and higher input costs. Nominal wage growth remains above the eurozone average, but it is gradually slowing and should reach around 5% for the year as a whole.

Public finances remain one of the key risks to the outlook. The deficit reached 4.5% of GDP in 2025, with the result also affected by one-off factors. Gross public debt exceeded 60% of GDP. The deficit is likely to remain elevated this year, while further consolidation will be complicated by weaker economic performance and the approaching electoral cycle. Government bond yields remain affected by elevated inflation risks, tighter ECB monetary policy, and a higher risk premium. S&P downgraded Slovakia’s rating to A, but euro area membership and integration into European financial markets continue to support investor confidence.

Download The Full Slovakia Outlook