Macroeconomic Forecast Update (February 2021)

The second wave of the pandemic will slow down the recovery of the Slovak economy. Owing to solid growth in the third quarter, output is expected to decrease by 5.8 per cent in 2020- a better result compared to our previous forecasts. The main contributors to the improved projections include a less pronounced decline in household consumption and a faster recovery of exports, supported mainly by strong car production. GDP will increase by 4.3 per cent in 2021, partly due to the faster than expected recovery following the first wave of the pandemic. After the initial slump, the labour market has stabilised. Yet, it is not expected to add new jobs until the end of the year when the first funds from the EU's Recovery and Resilience Plan may kick in. Potential future waves of the pandemic, however, still pose a risk to future economic prospects.