Economic outlook, analysis and forecasts

Slovak Republic - Economic forecast summary (June 2016)


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After accelerating in 2015, economic activity should slow somewhat as the boost from exceptional absorption of EU funds fades. Nonetheless, annual growth is projected to remain above 3%, led by persistently strong domestic demand. Household consumption will strengthen further, driven by improved labour market outcomes, low inflation and rising disposable income. Lower public investment will be partly compensated by new foreign direct investments in the automotive sector.

Fiscal consolidation is set to resume as the new government intends to reach a small budget surplus by 2019. In order to increase fiscal room for manoeuvre and to finance growth-friendly measures, the government should enhance public-sector efficiency, including via the current Value for Money initiative.

Productivity growth, although higher than the OECD average, has slowed considerably since the 2008-09 recession. Increasing it will be critical to continue the process of income convergence towards the best OECD performers. Reforming the educational system is a top priority, to extend educational opportunities to all and to enhance workers’ capacity to learn the new skills needed in a changing labour market, thereby increasing their employability and improving their well-being.

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