The Slovak economy ended the year 2023 with a growth by 1.1%, but its progress was the slowest since 2013

The growth of the economy in the last quarter and in total for the entire year 2023 was helped by the investments, which rose most dynamically in the last eight years, and by a positive balance in foreign trade. It was driven also by the higher performance of the sectors, especially industry, trade and construction. On the contrary, the economy was hampered by a drop in household consumption, due to a high inflation the households had to save more than during the pandemic or the financial crisis

Gross domestic product (GDP) increased by 1.3% year-on-year (at constant prices, seasonally adjusted) in the 4^th quarter of 2023. The growth rate above 1% was maintained in the last three quarters of the year, while at the end of the year the economic performance rose at the second highest rate. The volume of GDP at current prices was higher by 11% year-on-year and reached EUR 32 billion. After seasonal adjustment, GDP was higher by 0.3% quarter-on-quarter (compared to the 3^rd 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 industries, measured by gross added value, was the highest since 1995 in the 4^th quarter. The volume of gross added value nominally reached EUR 29.6 billion, which represented the growth of this significant component of GDP at constant prices by 5% year-on-year. It was also the most dynamic growth rate in the last 2.5 years.

The year-on-year increase in gross added value was recorded by all 10 group of sectors. The biggest impact on the overall result was the growth of industry by 4%, which is the most important manufacturing sector with a quarter share. It was mainly supported by a double-digit growth in manufacture of transport equipment by 10.2%, also in manufacture of metals by 5.9% and in manufacture of coke and petroleum products by 12.6%.

Performance in the second most important group of sectors, namely trade, transport, accommodation and food services¹⁾ increased by 8.3%, mainly due to a higher growth in transportation and storage by more than 10%.

The year-on-year higher performance of construction by 10.7%, information and communication by 7.2% and real estate activities by 2.8% also maintained a positive impact on GDP.

Expenditure method

The reduction of individual expenses continued also in the 4^th quarter. The decisive influence was the negative development of domestic demand affected by the ongoing savings of households, their final consumption was lower by 2.3%. The decline in gross capital formation also persisted, which decreased by 11.1% at constant prices, mainly due to the significant year-on-year decrease in inventories.

The economic performance throughout the year was primarily driven by higher investments and a persistent positive balance in foreign trade, which was caused by weakened import activity.

Investment activity measured by gross fixed capital formation was the most dynamic in the last quarter, year-on-year investments increased by almost 16%, which was the highest quarterly value in the last eight years.

Development of the Slovak economy for 2023

The Slovak economy ended 2023 with a growth above 1%, but it was the slowest growth since 2013, if we do not take into account the decline in 2020. In summary, for the whole year 2023, GDP rose by 1.1% (at constant prices, not seasonally adjusted). The nominal volume at current prices reached almost EUR 122.2 billion.

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For the year 2023, the performances of all structures of the economy increased. Gross added value (according to the production method) increased by 3.7% year-on-year, after a long time its year-on-year increase was reflected in all 10 monitored groups of sectors. The most significant impact was clearly the growth of industry by 5.7%. The key sector of the economy thus renewed its growth after the downturn in 2022. In the structures of the industry, manufacture of transport equipment increased decisively by more than 22% and manufacture of coke and petroleum products increased by almost 10%. The volume of added value exceeded EUR 100 billion at current prices for the first time ever.

The second largest positive impact on economic growth was the higher added value in trade, transportation, accommodation and food services¹⁾ by 5.3%, as well as in construction by 8.2%

According to the expenditure method, a significant drop in domestic demand by 5% had a dampening effect on the overall result of economic growth, which was mainly due to a drop in final consumption in households. Household consumption decreased by 2.5% year-on-year during the year 2023, which was the biggest drop in the last almost 30 years. No previous crisis, neither financial nor pandemic, has been able to compel households to save as much as the high inflation. Expenditures in public administration and non-profit institutions also remained at the annual level in negative values.

Of the domestic demand, only investments expressed by the formation of gross fixed capital maintained a positive impact, which increased by 9.6% year-on-year. It was the highest growth since 2015.

The overall performance of the economy was mainly due to the positive development in foreign trade. Since the growth of exports was faster than the growth of imports, the balance of foreign trade again reached positive values. Its value reached almost EUR 1.5 billion in current prices in 2023.