Slovakia: GDP growth gains steam in the fourth quarter
GDP expands faster than expected in Q4: According to a preliminary estimate, the economy closed 2024 on a stronger footing, expanding 1.8% annually in Q4, up from Q3’s 1.2% rise. The result was above market expectations and lifted 2024 GDP growth to 2.0% (2023: +1.4% yoy), marking the best result since 2021. On a seasonally adjusted quarter-on-quarter basis, economic growth picked up to 0.5% in Q4 from the previous quarter’s 0.3%, marking the fastest increase since Q1.
Robust government spending buttresses growth: According to the statistical office, an improvement in private and public consumption drove the acceleration in Q4, likely thanks to European Union funding. Moreover, merchandise exports contracted at the softest rate in 2024, boding well for the external sector. On the flip side, the statistical office noted a decline in investment activity.
A complete breakdown will be released on 7 March.
Stable growth in coming quarters: Our panelists expect the economy to expand at a pace similar to that of 2024 in 2025. Ongoing ECB rate cuts should spearhead a rebound in fixed investment, and stronger EU demand should add impetus to exports growth. That said, higher inflation compared to 2024 is poised to dent private spending growth, and fiscal consolidation efforts will cap government spending. Moreover, rising political instability and a reescalation of tensions with Brussels endangering the inflow of EU funds are downside risks.
Panelist insight: Commenting on the outlook, Matej Hornak, analyst at Erste Bank, stated:
“The Slovak economic growth could be threatened by external challenges, such as geopolitical tensions or a slowdown in foreign demand. Due to fiscal consolidation, the GDP growth forecast for the next two years has been reduced by half a percentage point, as lower consumption and weaker investment activity could dampen long-term economic growth. […] Risks to growth include rising economic protectionism and new measures hindering international trade.”