Bratislava, Slovakia – Slovakia is expected to face a sharp economic slowdown this year, according to official data.
In its latest economic forecast, the Slovak Finance Ministry expects the annual GDP growth to decelerate to 2.4% in 2019, one of its lowest levels in recent years, compared to 4.1% last year.
The slowdown should further continue next year with an annual growth rate of 2.3% in 2020, according to the latest predictions.
According to the ministry’s Institute of Finance Policy (IFP), “weaker prospects among our trading partners will squeeze dynamics of Slovakia’s labour market and household consumption”, leading to an important downturn in GDP growth.
Previous forecasts from the Ministry of Finance estimated Slovakia’s GDP to expand by 3.5% and 3.4% in 2019 and 2020 respectively.
The threat of a no-deal Brexit, economic slowdown in the rest of the Eurozone, including Germany, Slovakia’s main trading partner, and unresolved or escalating global trade disputes have taken a toll on the economic prospects of Slovakia, which remains highly dependent on its manufacturing sector and industrial exports.
Earlier predictions had counted on the Slovak economy to be one of the fastest-growing in Europe: in February, the OECD had forecast Slovakia to grow at a robust rate of 4.3% and 3.6% in 2019 and 2020.
But the most recent GDP figures corroborate these latest predictions: the country recorded the lowest annual growth rate among Visegrad Group countries during the second quarter this year, expanding by 2.6% year-on-year, according to Eurostat (compared to 2.7% in the Czech Republic, 4.2% in Poland and 5.2% in Hungary).
Stronger GDP growth should however pick up in 2021, highlights local media.
On the upside, Slovak unemployment is expected to drop to its lowest figure in recent years, falling to 5.8% at the end of 2019, according to the Finance Ministry.