Economic growth is expected to slow down over the two-year period 2019-20, mainly due to lower external demand from the Eurozone, especially from Germany, and looming downside risks, such as Brexit and a global protectionist escalation. However, according to the data atradius, the economic expansion is expected to remain above 2,5% annually, supported by robust domestic demand: the growth of private consumption (in the next two years expected at +3,3% and +4,4%, respectively) is supported by the increase in wages and employment. At the same time, strong wage growth has fueled inflation, also expected to be above 2%.
Public finances are confirmed on levels stable and since 2013 the deficit budget remained below 3% of GDP. According to analysts, the deficit is expected to be around 1,5% of GDP in 2019-20. Slovakia's external economic position is also solid: the banking sector is generally well capitalized with strong liquidity. However, the sharp increase in household debt over the past two years carries a potential downside risk and since 2018 the Central Bank has introduced stricter rules for access to loans.
The high dependency from the automotive sector carries a potential downside risk, as the Slovak economy is heavily dependent on industrial exports to the Eurozone (particularly to Germany), remaining vulnerable to adverse developments in the automotive sector. The industry's current challenges (reduced sales and profits, shift towards greater e-mobility from combustion engines, potential US tariffs on EU imports of cars and auto parts) pose a serious downside risk to the economy: any slowdown would increase the credit risk of Slovak companies along the international value chain. Other issues they arrive twigsthe growing shortage of manpower e laid down by the decrease in the working-age population, which negatively affects the medium-long term growth prospects of the country.
Currently the best investment opportunities for the Made in Italy they must be traced in research and development (R&D), design and innovation, ICTas well as outsourcing, high-tech, tourism and renewable energy. Interesting possibilities continue to present themselves also in the traditional Slovak industrial sectors: automotive, mechanical, chemical and pharmaceutical, electrical, woodworking or metallurgical sector. The construction and road infrastructure sectors should not be forgotten.
