FinMin's Outlook for Slovak Economy Deteriorates; 10% Slump Expected

FinMin's Outlook for Slovak Economy Deteriorates; 10% Slump Expected

Bratislava, June 23 (TASR) – Slovakia’s economy is predicted to slump by 9.8 percent year-on-year this year due to the coronavirus outbreak, stated the Finance Ministry on Tuesday, thereby lowering its prognosis in April by 2.6 percentage points.

The country’s economy is expected to begin recovering in the second half of 2020 before growing by 7.6 percent y-o-y in 2021 and reaching the pre-coronavirus level in 2022.

As domestic and foreign demand have fallen, companies will also postpone investments, unemployment will grow, and pressure for salary growth will be eliminated. Meanwhile, government consumption and new funds from the EU could boost the economy, but a possible second wave of coronavirus would have an adverse effect.

The sectors of accommodation and catering seem to be the worst hit, as indicated by data from eKasa (a system of government supervision of cash registers in shops) and retail revenues. Sales of cars and clothing also fell significantly during the lockdown.

At the same time 76,000 jobs are expected to be lost, mainly in tourism, catering, retail, transport, industry and construction. Nevertheless, if there were no Government measures to assist businesses, another 35,000 people would become unemployed, noted the ministry.

The unemployment rate should go up to 8.2 percent this year, before gradually falling to 7 percent next year.

The average nominal salary should increase by 2 percent this year, with inflation calculated to decelerate to 1.8 percent.