Slovakia: Economic slowdown meets fiscal headwinds

The Slovak economy continues to show signs of weakness. In 2Q25, GDP grew by just 0.6% y/y, marking the slowest pace since late 2022. Quarterly growth reached only 0.2% after seasonal adjustment, confirming a trend of subdued performance. Over the past five quarters, growth has hovered between 0.1% and 0.3%, well below the previous average of 0.7%. As a result, the full-year GDP forecast has been revised down from 1.3% to 0.7%.

External factors are also weighing on performance. US tariffs and a broader European slowdown are expected to impact Slovakia both directly—via reduced exports—and indirectly through weaker demand from trading partners. Domestically, fiscal consolidation plans for 2026 are adding further headwinds. The announced EUR 1.5bn package focuses on revenue-side measures, including higher health contributions, fewer public holidays, and more progressive taxation. Many of these steps will dampen household consumption and investment. One of the concerns is the temporary nature of some measures, which creates additional consolidation needs in the future once their effects expire.

Inflation remains elevated, driven by VAT hikes and a new financial transaction tax. Despite energy subsidies, inflation stayed above 4% during summer and may rise again in December. For 2026, inflation is forecast at 3.5%, though a new model of energy subsidies could push it higher.   

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