FinMin Lowers GDP Growth Forecast for 2025 to 0.8%, Should Speed Up Next Year

Bratislava, 25 September (TASR) - Slovakia's GDP growth should decelerate to 0.8 percent under the influence of weaker net exports, while growth is expected to speed up to 1.3 percent in 2026, mainly thanks to funds from the recovery plan, according to the latest prognosis from the Finance Ministry published by the Financial Policy Institute (IFP) on Thursday. Like Slovakia's central bank (NBS), IFP thus worsened its previous prediction from June, when it was expecting GDP growth at 1.3 percent and 1.6 percent, respectively. "The pace of growth of the Slovak economy will slow down amid high uncertainty in global trade. GDP will grow by 0.8 percent, dragged down by weakened net exports. However, domestic demand will strengthen. Household consumption will be supported by significant salary growth, which will increase by 2.3 percent even after taking higher prices into account," said IFP in its comments on the new prognosis. Capital formation will rely on investments from the Recovery and Resilience Plan, but uncertainty in global trade will not help investments, it added. "In 2026 we expect foreign demand to revive and Slovakia's GDP to grow by 1.3 percent. Foreign demand will begin to recover from the tariff battle, but Slovak exports, mainly oriented towards the automotive industry, will slightly lag behind. The economy will draw most of the funds from the Recovery and Resilience Plan, which will support investments," stated IFP, adding that the ongoing consolidation of public finances will dampen household consumption and force people to dip into their savings. IFP in its latest prognosis expects inflation to accelerate to 4.1 percent this year. "The price increases have mainly been driven by the increase in the VAT rate in January. Conversely, subsidised energy prices are pushing inflation down," explained IFP. Next year inflation should reach 4.4 percent as a result of energy prices returning to market levels. ko/df