Slovakia Economic Forecast

Growth slowed in Q1, according to preliminary data. In a press release, the Slovak Statistical Office highlighted that stronger net trade and investment were the key growth drivers over the quarter. The full breakdown is due on 6 June. Turning to Q2, our panelists expect growth to remain roughly stable. In April, hiring intentions moderated compared to the Q1 average. That said, in the same month, consumers became less pessimistic compared to Q1, while easing supply chain pressures helped businesses turn optimistic. In politics, in May President Zuzana Caputova appointed Central Bank deputy chief Ludovit Odor to lead a technocratic government. The government is likely to face strong opposition within the fragmented Parliament. In the same month, S&P revised Slovakia’s outlook from negative to stable, citing reduced exposure to Russian energy imports.

Harmonized inflation moderated to 14.0% in April (March: 14.8%) due to lower price pressures for food and housing, as well falling transport prices. While inflation will decelerate this year, it will remain elevated nevertheless. Our panelists project average inflation to fall back into single digits in Q3. Oil and natural gas prices are key factors to watch.