The Slovak economy rose by 1.5%, it was its most favorable performance in the last five quarters

The positive development of the economy was the result of the surplus in foreign trade and the investment demand did not stop either. Manufacturing sectors contributed significantly to the growth, in addition to the higher performance of industry and trade, construction and the financial and insurance sectors. Higher growth was hampered by the persistent impact of high inflation, which lead mainly to lower household consumption.

Gross domestic product (GDP) increased by 1.5% year-on-year in the 2nd quarter of 2023 (at constant prices, not seasonally adjusted). The volume of GDP at current prices was higher by 11.3% year-on-year and reached EUR 30.3 billion. In a seasonally adjusted quarter-on-quarter comparison (compared to the 1st quarter of 2023), GDP increased by 0.4%.

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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

Individual sectors, whose performances are reflected in the gross added value, maintained good results in the 2nd quarter of 2023. The volume of gross added value at current prices reached EUR 27.6 billion, which in constant prices was EUR 21.1 billion year-on-year, the added value thus maintained its growth above 3%, namely at the level of 3.3%.

The year-on-year increase in gross added value was reached by all 10 monitored sectors of the economy. The biggest impact was the growth of industry by 3%, which is the most important manufacturing sector with a share of 22.1% in the added value of the entire economy. The positive performance of the entire industrial production was affected by three sectors, namely the manufacture of transport equipment, which increased by 35.7%, manufacture of basic pharmaceutical products and pharmaceutical preparations by 28.3%, and other manufacture, repair and installation of machinery and equipment by 1.4%. Of the more important industrial sectors, manufacture of chemicals and chemical products recorded a decrease in added value by 37.5%.

The second most significant group of sectors, wholesale, retail; transportation and storage; accommodation and food services increased by 4.1%, while the higher growth was mainly manifested in transportation, which rose by 16.1%. In trade, only a very moderate growth of 0.5% was recorded.

The year-on-year performance of construction which was higher by 5.7%, financial and insurance activities by 13.6% and real estates by 1.8% maintained a positive impact on GDP.

Expenditure method

The weakening of economic activity in terms of individual expenditures also continued in the 2nd quarter of 2023. Final consumption had a decisive influence on the negative development of domestic demand, with a decrease by 3.3%, while all its components recorded a decrease. Due to high inflation, households continue saving, which was reflected in a lower consumption for the second consecutive quarter, currently by 3.6%. The remaining two components of final consumption remained in negative numbers, but with a milder decline.

The gross capital formation also maintained a significant drop, which was lower by 19.5% mainly due to the decrease in inventories. On the contrary, its sub-item, the formation of gross fixed capital, presenting the level of investment, was the only one of all components of domestic demand expenditure to maintain its growth by 5.2%.

After a decline at the beginning of 2023, foreign demand (exports of products and services) maintained a slight growth by 0.1% in the 2nd quarter of 2023. On the contrary, the import of products and services continued to decrease significantly by 8.3%, as a result of which the balance of foreign trade reached significantly positive values.

GDP for the first half of 2023

In total for the first half of 2023, GDP increased by 1.3% (at constant prices, not seasonally adjusted). The nominal volume in current prices reached EUR 58.1 billion.

Gross value added at constant prices reached a year-on-year growth by 3.5%. In total, out of 10 sectors, 9 of achieved a year-on-year increase in gross added value, the industry sector had the most significant impact on the development of the economy by 6.7%, the sectors of wholesale and retail, repair of motor vehicles and motorcycles; transportation and storage; accommodation and food services by 4.3% and construction by 11.1%. Only the real estate sector recorded a decrease by 0.8%.

Foreign demand (exports) was lower by 2.3% year-on-year. A more significant decrease in domestic demand by 7.5% was mainly due to the effect of a decrease in final consumption, mainly in households by 2.9%. The gross capital formation was also significantly lower by 23.4%, but the formation of gross fixed capital was the only one to maintain its growth by 5.5% in the first six months of the year.