The political crisis in Slovakia has caused an increase in short-term political uncertainty, however, it should not have a significant impact on economic or fiscal politics, wrote the Fitch Ratings agency. Fitch also does not see a risk of change in the current state of economics in the event of early elections. The agency believes that stability is anchored thanks to both European and Slovak directives. The structure of the economic policy is robust and trustworthy. According to Fitch, the key role of foreign investment (most of all those in the automotive industry and EU funds) should motivate any government to maintain macroeconomic stability. The agency expects the Slovak Gross Domestic Product to grow by 3,6% this year and by 3,9% in 2019.
The basic anchors of Slovak fiscal politics are, according to Fitch, a Constitutional law about budget responsibility as well as the EU Stability and the Growth Pact. According to the European Commission, Slovakia met the required fiscal correction in 2017 as strong economic growth helped to decrease deficit. Fitch also expects the budget deficit from 2017 to decrease from 1.3% of the GDP to 1% and the public debt to fall under 50% of the GDP.
On February 2nd 2018, the Agency gave Slovakia the rating A+ with a Stable Outlook. The country earned it mainly due to the its sound macro-economic performance, supported by sustained foreign capital inflows and European Union (EU) and Eurozone membership. Nonetheless, Fitch noted that the rating is constrained by high net external debt, forecast at 28.1% of GDP versus the peer 'A' median of 9.6% of GDP in 2018. Another point of concern is the rapidly rising household indebtedness, currently at around 40% of GDP, Fitch pointed out. The country's debt has more than doubled over the last decade, a condition that could also increase vulnerabilities to shocks if left unchecked.
