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Ministry of Finance of the SR publishes the latest macroeconomic and tax forecast

Last update: 28.09.2023 06:00

Consolidation can be achieved while maintaining economic growth, a balanced budget would lead to recession

The Slovak economy will slow down as a result of Russia's invasion of Ukraine and GDP will grow by 1.3% in 2023. However, the labour market will remain resilient and, together with the fall in inflation and the drawdown of EU funds in the second half of 2023, real wages for employees will rise. These are also some of the conclusions of the latest macroeconomic forecast published by the Ministry of Finance of the Slovak Republic.

The September macro-forecast of the Ministry of Finance of the Slovak Republic contains a simulation of the further development of the economy. In the case of the gradual (smart) consolidation proposed by the current government, GDP would grow by 0.5% in 2024 and economic growth would be between one and two percent in the following years. Real wages would only be under pressure in the public sector, while they would continue to rise in the private sector. The unemployment rate would rise only slightly.

In the case of next year's balanced budget, the economy would shrink by almost 6.5%, wages would fall by 4% and the number of unemployed would rise by 130,000. The latest forecast therefore shows directly the impact that the need for a sudden balanced budget would have on our economy. The state would have to reduce its spending by around 7% of GDP from one year to the next. This would have a significantly negative impact on living standards.

Thus, in contrast to a balanced budget, gradual consolidation would not send the economy into recession. However, the Ministry of Finance considers it extremely necessary to take into account consolidation efforts in the next budget at an optimal rate of 5% of GDP. The result would be to stabilise the debt ratio below 60% (55.9%) by 2026 and reduce the deficit while maintaining healthy economic growth.

The forecasts can be found on the new IFP website:

Macroeconomic forecast:

Tax forecast:

Press Department
Ministry of Finance of the Slovak Republic