The economy holds its breath (June 2020)

The Slovak economy will shrink by 9.8 % in 2020 due to the coronavirus pandemic. Domestic and foreign demand will fall and firms will postpone investment. The labour market will contract significantly as unemployment rises and wage pressure subsides. Government consumption will be the only factor pushing output upward. The economy will gradually start to recover in the second half of the year, leading to GDP growth of 7.6 % in 2021. The economy will remain below its potential during the entire horizon of the forecast and will reach its pre-crisis levels only at the end of 2022. The forecast is based on budget objectives introduced in the Stability Programme. The main downside risk to the forecast is a recurrence of the disease which would deepen the economic recession. In contrast, the EU Recovery and Resiliance Facility would boost economic growth.