According to RRZ, economic growth should slightly accelerate in the first quarter
13. mark 2023
The growth of the Slovak economy should be somewhat faster in the first quarter than the February forecast of the Council for Budget Responsibility (RRZ) expected. They estimate GDP growth of 0.4% quarter-on-quarter, which represents an acceleration compared to the previous quarter. Consumer demand remains relatively solid, as does the performance of the European and global economy. The labor market should also benefit from this.
Under the pressure of high inflation, household consumption should grow only slightly according to RRZ. Real wages are in a phase of decline. Despite this, households seem to be taking away from accumulated savings, and sellers in services and trade report a relatively solid level of consumer demand in surveys.
According to the council, Slovak exports are picking up following the decline in the previous quarter. It is driven by the improved expected performance of the Eurozone economy at the beginning of the year. Investments are also picking up, which was helped by a stronger drawdown of EU funds in January and increased confidence in the construction industry. Consumption expenditure in the public sector also has an upward trend, even in real terms.
Exports might additionally benefit from improved economic performance in China, which has been a boost to the global economy as a whole since the beginning of the year. Activity starts here following the end of anti-pandemic restrictions.
The slightly more favorable development of the economy is also reflected in the improved demand for labor. However, with the high growth of production costs, employers will be cautious in hiring employees, and employment should grow only slightly this year.
