IFP: GDP Will Probably Grow by 3.5% This Year, and 5.3% Next Year

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Illustration picture (photo by TASR/AP)

Bratislava, February 10 (TASR) – Slovakia’s gross domestic product (GDP) is likely to grow by 5.3 percent in 2023, said Finance Ministry State Secretary Marcel Klimek at a joint press conference with representatives of the Financial Policy Institute (IFP) concerning the institute’s new macroeconomic forecast.

IFP head Juraj Valachy added that GDP growth is expected this year as well, at 3.5 percent. The analysts also expect a sharp increase in the rate of inflation this year.

The state secretary highlighted that the IFP 2021-2025 forecast predicts that the omicron variant won’t close down the economy. “According to our calculations, omicron will decelarate the economy only slightly, which is good news,” noted Klimek, adding that the economy is decelerated when many people are unable to work, but this only temporary.

Although the IFP analysts expect real GDP growth of 3.5 percent this year, they point out that economic performance will still have a reserve. On one hand, the economy will gain momentum via investments from the recovery plan, but it may be dampened by the pandemic, inflation and supply problems in industrial production.

They are more optimistic about the outlook for 2023, predicting 5.3-percent GDP growth, mainly due to the absorption of EU funds. When the omicron wave fades, they also expect a full recovery in job creation and investment, which has been postponed due to uncertainty. There should no longer be problems with industrial production, either. “The economy will start to overheat slightly and will be dampened by an expected consolidation of public finances,” said the analysts.

In 2024 and 2025, the analysts expect economic growth to slow to just under 2 percent when EU funds are drawn at standard levels again.

However, the IFP analysts issued a warning in connection with inflation, which is likely to jump sharply this year and could reach 6 percent on average in 2022, mainly due to rising energy prices. According to the analysts, price growth in 2023 will continue to approach 5 percent.