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The Slovak economy is recovering more moderately for the third wave of the pandemic, but will continue to grow. For the whole of 2021, our GDP will increase by 3.7%. Although household consumption will fall at the end of the year and the recovery in the labor market will be postponed, we expect the impact of the coronavirus on the economy and employment to be more modest than at the end of last year. This is assumed by the macroeconomic forecast for the years 2021 - 2024 of the Institute of Financial Policy (IFP) of the Ministry of Finance of the Slovak Republic.
The third wave of the pandemic will dampen the economic recovery at the end of the year. Household consumption will fall by less than 2% in the fourth quarter, affecting the accommodation, catering, recreation and culture sectors in particular. However, the industry will remain resilient, which will reduce GDP by only 0.1%. The average nominal wage in Slovakia will also increase by 5.4% this year.
Thanks to the improving epidemic situation, the labor market resumed job creation in the second quarter of this year. Compared to the first quarter, just over 18,000 people found work and employment increased across all sectors. We expect that the unemployment rate will only slightly exceed 7 percent in 2021 and will start to decline gradually in the coming years. The unemployment rate is expected to reach 6.7% in 2022 and the significant decline in the coming years will be supported by investments from the EU Recovery Plan.
In its forecast, IFP assumes that GDP growth will reach 4.2% in 2022, which will be mainly due to investments from the EU Recovery Plan and renewed household consumption. The uncertainty surrounding the pandemic will no longer be so significant and companies will not be afraid to invest again. According to the forecast, total investment in the economy will thus increase by almost 17% year-on-year. Nominal wages will grow to 5.5% next year. In 2023, economic growth will accelerate to 5%, mainly due to the drawdown of Eurofunds from the end of the programming period.
Ministry of Finance of the SR
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