Slovakia faces its weakest economic growth outlook in years, according to a new forecast that paints a notably bleaker picture than other domestic institutions.
The Slovak Academy of Sciences (SAV) said in its spring projection that the country’s economy was expected to expand by just 0.5% in 2026. That would mark the slowest pace of growth among neighbouring countries, excluding Ukraine, and represents a sharp deceleration compared with previous years.
The estimate is also the most pessimistic currently available. Even the National Bank of Slovakia (NBS), which had previously warned of a subdued recovery, forecast growth of 0.6%. Meanwhile, the Finance Ministry’s Institute for Financial Policy is more optimistic, predicting expansion of around 1%.
SAV economists note that their projections have tended to be cautious in the past – and, they argue, justified. Last year’s outlook from the academy was also the lowest among domestic forecasters, yet actual growth ultimately came in even weaker.
A combination of factors is expected to weigh on the economy. Chief among them is fiscal consolidation, as the government seeks to repair public finances. According to the analysis, these measures are likely to dampen consumer confidence and spending.
Households are expected to postpone purchases and rely more heavily on savings, while investment activity is also set to decline under the pressure of tighter fiscal policy and heightened uncertainty. External conditions are unlikely to provide much relief, with weaker global demand and ongoing economic instability abroad further constraining growth.
Some support is expected from EU recovery funds, with spending from Slovakia’s Recovery and Resilience Plan due to peak this year. However, this is unlikely to fully offset the broader slowdown.
The government’s consolidation strategy has also drawn criticism from the Council for Budget Responsibility, which argues that the measures rely too heavily on increasing revenues rather than cutting expenditure. It warns that repeated consolidation packages risk undermining long-term growth, competitiveness and the country’s attractiveness to investors.
Inflation is expected to remain elevated, hovering around 4%, driven in part by persistently high energy costs. At the same time, the labour market outlook is deteriorating.
SAV forecasts a continued rise in unemployment, a trend that began in 2025. Despite a relatively high number of vacancies, structural and regional mismatches are preventing jobseekers from filling available roles. The central bank has similarly warned that up to 30,000 people could lose their jobs until 2027.
This mismatch is contributing to a growing number of people leaving the workforce altogether, whether to care for family members or due to difficulty finding suitable employment. Young people, including students, are also encountering increasing challenges entering the job market.
Looking further ahead, there are signs of modest improvement. SAV expects growth to pick up to around 1.3% in 2027, supported by stronger foreign demand and increased defence spending across the European Union. The launch of a new Volvo car plant in Kosice is also expected to provide a boost to exports.
Nevertheless, economists warn that without structural reforms, Slovakia risks falling further behind its regional peers, with little sign of convergence towards more advanced EU economies in the coming years. (The Slovak Spectator)