The Slovak economy started the year 2023 with a growth by 1%, but its progress was the slowest in the last two years

The growth of the economy was affected by the surplus in foreign trade and the persistent growth of corporate investments. A decrease in household spending had a dampening effect. Among the sectors, especially the growing performance of industry, trade and transportation, was beneficial.

Gross domestic product (GDP) in the 1st quarter of 2023 increased by 1% year-on-year (at constant prices, not seasonally adjusted). The volume of GDP at current prices was higher by 13% year-on-year and reached EUR 27.7 billion. In a seasonally adjusted quarter-on-quarter comparison (compared to the 4th quarter of 2022), GDP increased by 0.3%.

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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 performances of individual sectors, which are reflected in the gross added value, were higher in the 1st quarter of 2023 than a year ago. The volume of gross added value at constant prices reached EUR 25.3 billion, the key component of GDP rose by 3.8% year-on-year. Industry performance above the 3% level was last seen in Q1 2019.

The year-on-year increase in gross added value reached 8 out of 10 monitored sectors of the economy. The biggest impact was the growth of industry by 10.1%, the most important sector created almost a third of the added value of the economy. The year-on-year increase in added value in manufacture of transport equipment by 33.7%, in manufacture of basic metals and fabricated metal products excluding machinery and equipment by 13.6%, as well as in manufacture of machinery and equipment by 7.5% contributed to the performance of this sector. Of the more important industrial sectors, the added value dropped only in manufacture of electrical equipment by 13.9%.

The second most significant group of sectors, wholesale and retail, transportation and storage; accommodation and food services with a year-on-year increase in performance by 4.5% also contributed to the overall growth; while the higher growth was manifested mainly in transportation by 8%. An increase by 3.4% was recorded in trade.

The year-on-year performance of construction by 23.8%, financial and insurance activities by 6.2%, and information and communication by 3.4% also had a positive impact on GDP.

The year-on-year decrease in added value was recorded mainly in activities in the field of real estate by 3.4%, as well as in professional, scientific and technical activities; administrative services by 1.5%.

Expenditure method

The negative development of domestic demand had a decisive impact on the performance of economic activity in terms of individual expenses, final consumption dropped by 3% year-on-year and the decline was reflected in all its components, especially in the decrease of household consumption by 2.1%. This component of GDP with its positive values affected the GDP two years ago, its current decline is due to high inflation, the impact of which was manifested later than expected.

The formation of gross capital decreased significantly year-on-year by almost 30%, mainly under the influence of a significant decrease in inventories, which completely overshadowed the positive result in the field of investment. Gross fixed capital as a manifestation of corporate investment activities was higher by 5.7% than a year ago.

Foreign trade also had a positive impact on GDP growth - although exports decreased year-on-year, but because the decline in imports was even more dynamic, the economy significantly benefited from the positive balance of foreign trade.