Slovakia's economy should grow this year and next, while inflation should fall, Slovakia's central bank governor Peter Kazimir and vice-governor Ludovit Odor told while presenting the so-called spring prognosis on Wednesday. Slovakia's GDP growth should amount to 1.3 percent this year, while it should reach 3.2 percent next year and 3 percent in 2025. Consumer prices should grow by 10.5 percent this year, 6.7 percent next year and 4.8 percent in 2025.
"The prognosis hasn't significantly changed when compared to December - inflation in Slovakia should gradually decline. This year's double-digit price growth mainly takes into account cost factors, such as energy, inputs and salaries. Inflation will slow down in the next few years. The ability to reach the inflation target more quickly will be hindered by energy prices, as we expect them to catch up with market prices only at the end of the forecast period," said Kazimir. According to him, high inflation will temporarily decrease the purchasing power of households, and the economy will be driven by increased drawing of EU funds this year.
According to the bank’s governor, people have run out of their pandemic savings, so analysts do not expect the strong household appetite from last year to continue. Consumer demand should briefly decline. “After inflation retreats from the current long-term highs, we expect a revival in private consumption in the upcoming years, supported by growth in real incomes," noted Kazimir, adding that the foreign environment has improved when compared to the December outlook, stated Kazimir.
According to Ludovit Odor, the prognosis indicates a significant worsening of public-sector management from 2023. The deficit is expected to deepen gradually in the forecast period. The worsening should chiefly result from measures to alleviate the energy crisis and permanent legislative measures, such as the cut in value-added tax (VAT) and [reintroduction of] free lunches. A slight improvement in public-sector management will come as late as in 2025. The public debt should grow to 60 percent of GDP during the forecast period.
