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Robust growth is projected to continue. Significant new capacity in the automotive sector will boost export performance. Labour market buoyancy and solid investment growth, underpinned by favourable financial conditions and increased disbursements of EU funds, will contribute to strong domestic demand. Wage growth will increase and consumer price inflation will reach 3% as the labour market tightens and pressures on production capacity build up.
The government plans to reach a budget balance by 2020, fully in line with EU requirements. Fiscal consolidation is appropriate in the context of intensifying pressures on resources. In the longer term, rapid population ageing will increase public spending significantly. A weakening of the 2012-13 pension reform, currently discussed in the parliament, would make it more difficult to address this challenge.
1. Percentage of manufacturing firms pointing to labour shortages as a factor limiting production.
2. Estimates for 2018 include the launch of new production lines that have started in 2018.
Source: Eurostat, industry database; OECD Trade database; OECD Economic Outlook 104 database; Slovak Investment and Trade Development Agency (SARIO); and Zväz automobilového priemyslu Slovenskej republiky.
Economic Survey of the Slovak Republic (survey page)