The Slovak economy started 2024 at the fastest pace in the last two years, increasing by 2.7%

The growth of an economy at the beginning of the year was again affected by an increased domestic demand after the year. It was strengthened by households and the public sector, which started to spend more again due to lower inflation. All manufacturing sectors and investments remained in positive values, but they were significantly less dynamic than in the previous quarters. Both exports and imports recorded a moderate growth after the year, due to higher export volumes foreign trade remained in positive numbers.

Gross domestic product (GDP) increased by 2.7% year-on-year (at constant prices, seasonally adjusted) in the 1^st quarter of 2024, which was the most in the last eight quarters. The growth at the level of 2% was maintained even in the last two quarters of last year. The volume of GDP at current prices was higher by 8% year-on-year and reached EUR 29.8 billion. After seasonal adjustment, GDP was higher by 0.7% quarter-on-quarter (compared to the 4th quarter of 2023) in real terms.

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According to the ESA 2010 methodology, GDP is quantified in three ways (production method, expenditure method, income method). Considering the available sources of information, the production method is decisive for the Slovak Republic.

Production method

The performance of manufacturing sectors measured by gross added value maintained a growth in the 1^st quarter of 2024. The volume of gross added value nominally reached EUR 27.3 billion, which represented a year-on-year growth of this important component of GDP by 2.3%. However, it was the slowest growth rate in the past five quarters, affected mainly by a weak industrial growth.

A year-on-year increase in gross added value was recorded in all 10 monitored group of sectors. The most important- industry in terms of weight recorded only a slight growth by 0.3%, in the 1^st quarter of 2024 it represented 30% of the total added value. The year-on-year increase in the added value of this sector was primarily supported by double-digit growth in manufacture of transport equipment by 11.6% and in manufacture of basic metals and fabricated metal structures by 10.1%. On the contrary, higher growth was prevented by a significantly lower performance in manufacture of coke and refined petroleum products by 13.8%, in manufacture of rubber and plastic products by 15.9%, as well as in manufacture of electrical equipment by 17%.

Performance in the second most important group of sectors, namely trade, transport, accommodation and food services¹⁾ increased by 1.7%, mainly due to a higher growth in transportation and storage by 7.3%.

The growth of the gross added value was significantly contributed by smaller sectors, namely a year-on-year higher performance in professional, scientific and technical activities by 5.2%, financial and insurance activities by 10.6%, public administration by 1,4% and in information and communications by 3.9%.

Expenditure method

The spending slowdown, which persisted throughout 2023, stopped in the 1^st quarter of 2024. Domestic demand crucially affected the GDP growth, which after four quarters of stagnation achieved a year-on-year increase by 4.1%. With the fall in inflation, households began to spend more again, their consumption was higher by 3.6%. Public administration increased consumption even more significantly, increasing by 6.5% in the 1^st quarter of 2024, which was the highest growth rate in the last three quarters.

Gross capital formation, which had been decreasing throughout the last year, increased slightly by 2.8% year-on-year at constant prices, not only due to a more moderate decrease in inventories, but also due to the ongoing investment activity. The volume of investments, measured by the gross fixed capital formation, increased by 1.7% year-on-year at the beginning of the year, though investment was a lot less dynamic than in the previous six quarters, when it significantly affected the Slovak economy.

Last year´s weakened exports and imports, recorded higher year-on-year values in the 1^st quarter of 2024. Export of products and services (foreign demand) increased by 1.8%, import of products and services by 2.9%. Higher volumes of exports than imports continued, which kept the balance of foreign trade in positive values.