Fiscal consolidation and US tariffs are weighing on the growth of the Slovak economy. Furthermore, the former is set to intensify in 2026. We expect another round of fiscal consolidation to dampen growth and keep any growth recovery muted into 2026. We estimate GDP growth to slow markedly in 2025 to 0.7% and accelerate only modestly to 1.6% in 2026, held back by fiscal consolidation. However, we see risks tilted towards weaker growth in 2026. The disinflation process in the economy is set to be interrupted yet again by the impact of fiscal consolidation. We expect the rollback of energy measures and tax changes to sustain high inflation at 4.4% in 2026, after recording 4.3% in 2025, on our estimate. The labour market is likely to experience a slight cooling, but it should remain structurally tight and continue generating inflationary pressures. While we expect fiscal consolidation to continue, we have not factored in the full extent of the necessary fiscal consolidation, which is set to restrain growth in future years. 

Fiscal consolidation and US tariffs are weighing on the growth of the Slovak economy. Furthermore, the former is set to intensify in 2026. We expect another round of fiscal consolidation to dampen growth and keep any growth recovery muted into 2026. We estimate GDP growth to slow markedly in 2025 to 0.7% and accelerate only modestly to 1.6% in 2026, held back by fiscal consolidation. However, we see risks tilted towards weaker growth in 2026. The disinflation process in the economy is set to be interrupted yet again by the impact of fiscal consolidation. We expect the rollback of energy measures and tax changes to sustain high inflation at 4.4% in 2026, after recording 4.3% in 2025, on our estimate. The labour market is likely to experience a slight cooling, but it should remain structurally tight and continue generating inflationary pressures. While we expect fiscal consolidation to continue, we have not factored in the full extent of the necessary fiscal consolidation, which is set to restrain growth in future years. 

Key features of the outlook

We expect GDP growth to slow to 0.7% in 2025 from 1.9% in 2024. We estimate a modest acceleration to 1.6% in 2026 as fiscal consolidation hinders growth in household disposable income, increases the tax burden on firms and limits investment. However, growth should be propelled by higher uptake of EU funds, the deployment of new automotive capacity, and the recovery in external demand. As in 2025, we anticipate a fiscal consolidation-led surge in inflation at the start of 2026. We see inflation printing at 4.3% in 2025 and remaining high at 4.4% in 2026. We expect core inflation to remain sticky but to moderate to below 4% in 2H26 on the back of slower wage growth and consumer demand. Our forecast is conditional on US tariff policy and subject to downside risks to growth related to the utilisation of EU funds. Moreover, we do not incorporate the full scale of the required fiscal consolidation beyond 2026, which, if realised, would reduce growth further, in our view. Lastly, the new energy subsidy scheme remains shrouded in large uncertainty. This could significantly affect our inflation forecast for 2026, as we assume a partial and mostly conservative pass-through of higher wholesale gas and heat prices. 

Fiscal consolidation dominates the growth trajectory

The Slovak economy has grown sluggishly so far in 2025, rising by 0.1-0.2% qoq in 1H25, a pace that likely sustained in 2H. We estimate a 0.1% and 0.2% qoq rise for 3Q and 4Q, respectively. Following FY24 GDP growth of 1.9%, we expect a major slowdown to 0.7% in 2025 amid intense pressure from US tariffs and fiscal consolidation

Another surge in inflation amid further fiscal consolidation

The disinflationary process is likely to be interrupted again. Inflation accelerated in 3Q, averaging 4.5%, but we expect it to decelerate to 4.1% in 4Q. However, the moderation likely ends there. As in 2025, we expect fiscal consolidation to lift headline inflation at the start of 2026. Inflation looks set to remain elevated in 2026 at 4.4% after likely printing at 4.3% (KB estimate) in 2025. This should reflect the phasing out of energy measures and VAT changes, which we estimate will add c.1pp and 0.2pp to headline inflation.

Cooling labour market but structurally restraining the economy

We expect the weaker economy to have a modest cooling effect on the labour market and the ILO unemployment rate rising to 5.6% in 2026. Although wage growth remained high in 2025 at 6.8% (KB estimate), we expect it to slow to 4.9% in 2026. This would significantly hinder the recovery of household purchasing power.

Fiscal consolidation ramping up further

Fiscal tightening is set to dampen growth in the coming years. In our forecast, we incorporate fiscal consolidation for 2025 and 2026 but do not account for the full scale of consolidation required to achieve the budgetary targets. 

Risks – Fiscal trajectory, political instability and EU funds

Our forecast is conditional on US tariffs. Domestic political turmoil and waning fiscal consolidation efforts could further strain the fiscal balance, which has limited potential to provide a tangible boost to the economy. Further required consolidation measures are a downside risks to our growth forecast for the coming years beyond 2026. Our inflation forecast is subject to significant uncertainty due to the new energy subsidy scheme. 

Shareholders approved an extraordinary dividend of CZK4.0 per share at today's (November 14) General Meeting. This corresponds to a gross yield of 2.1%. Moneta paid a regular dividend of CZK10.0 in May of this year.

The record date is November 21. With standard settlement, Moneta shares will last trade with entitlement to this extraordinary dividend on Wednesday, November 19.

The dividend will be paid on December 16, 2025.

Last year, Moneta paid its shareholders an extraordinary dividend of CZK3.0, in addition to the standard dividend of CZK9.0.

Shareholders approved an extraordinary dividend of CZK4.0 per share at today's (November 14) General Meeting. This corresponds to a gross yield of 2.1%. Moneta paid a regular dividend of CZK10.0 in May of this year.

The record date is November 21. With standard settlement, Moneta shares will last trade with entitlement to this extraordinary dividend on Wednesday, November 19.

The dividend will be paid on December 16, 2025.

Last year, Moneta paid its shareholders an extraordinary dividend of CZK3.0, in addition to the standard dividend of CZK9.0.