Analysts: After Weaker Last Year, Slovakia's Economy Could Accelerate in 2025 /2

Bratislava, 13 February (TASR) - After slowing down to 0.8 percent of gross domestic product (GDP) last year, the Slovak economy could accelerate its growth rate to 1.1-1.3 percent of GDP this year, which is due to the European Central Bank's relaxed monetary policy, the start of production in case of some investments, including the fourth block of the Mochovce nuclear power plant, and the start of production at the Volvo car factory, several analysts stated on Friday, adding that growth will continue to be dampened mainly by the consolidation of public finances. "The outlook for this year is not very favourable, especially due to the consolidation of public finances and weak competitiveness, but GDP growth could accelerate slightly over time. However, for the whole year, it will probably only reach a value close to 1.1 percent with a further decline in employment," said VUB analyst Michal Lehuta. Slovenska sporitelna bank analyst Matej Hornak pointed out that the future performance of the Slovak economy will largely depend on how foreign trade develops and how quickly the European economy recovers, especially the German one, with which Slovakia is closely linked. The European Central Bank's relaxed monetary policy should also have a positive impact on Slovakia's GDP, as lowering interest rates creates more favourable conditions for financing investments and consumption. "Added to this is the continued absorption of funds from the recovery plan, which we expect to provide a significant growth stimulus, as hundreds of millions of euros await us here," stated Hornak. The growth of the Slovak economy is also shaped by necessary fiscal consolidation. According to Hornak, the measures adopted have a significant negative impact on economic activity, pushing GDP growth down, but some of them also have a long-term negative impact, for example on the business environment, thereby reducing the country's competitiveness and economic potential. "Given the development of public finances, consolidation will have to continue. At this point, we expect the Slovak economy to grow at a rate of approximately 1.3 percent this year," added the analyst. Lubomir Korsnak from UniCredit Bank Czech Republic and Slovakia expects the same GDP growth this year. He pointed out that, unlike last year, public investment will no longer provide significant support to the economy. Although the recovery plan may boost the figures at the beginning of the year, the analyst expects to see a predominantly downward trend in the second half of the year. According to him, Volvo's contribution to Slovakia's GDP growth will also depend on how the carmaker establishes itself in the country. "Whether it will be a more extensive form with a greater effect on Slovak GDP as in the case of older car manufacturers in the country, including VW, Stellantis, and KIA, or just an assembly line, where only labour is basically accounted for in Slovakia, as in the case of Jaguar Land Rover. First signs are indicating rather the latter alternative, added Korsnak. NOTE: This story has been extended to include the final two paragraphs. am