Economic growth has been robust in 2015 and is projected to increase to around 3½ per cent in 2016 and 2017. Improvements in the labour market and rising incomes will support private consumption. The launch of new car models and the modernisation of production lines by incumbent foreign investors will provide additional momentum to the car industry. Solid growth in the euro area and easing financing conditions will boost investment and exports.
After five years of fiscal consolidation, fiscal policy easing in 2014 and 2015 has provided room for strengthening measures to raise inclusive growth, notably active labour market programmes and social security exemptions for low-wage workers. However, as the Slovak Republic has one of the fastest ageing populations in Europe,further debt reduction is needed in the medium term.Widening the tax base, improving further tax collection and strengthening tax administration capacity are key.
Energy intensity is one of the highest in the OECD, but revenues from environmental taxation are among the lowest. Reducing subsidies on electricity consumption and promoting further renewable energy would make a contribution to climate change mitigation.