Slovakia’s rating remains at A2, however, mainly due to our high energy dependence on Russia, the Moody's rating agency has downgraded the country’s outlook from stable to negative. The unpredictable situation is the biggest threat to the economy. In addition to gas and oil, Slovakia imports other energy raw materials from Russia. In 2020 Russian imports accounted for up to 57% of Slovakia’s energy mix, well above the European average of 24.4%.
Moreover, the country’s economy is at higher risk as its gross domestic product (GDP) is driven by the manufacturing sector, which accounts for 22.2% of GDP, also higher than the eurozone average. The Agency also points to structural problems such as the ageing population. Moody's expects Slovakia's real GDP to grow by 1% this year and expects growth of 1.3% next year.
On the other hand, the analysts also assess positive steps taken by Slovakia, in particular efforts to diversify energy sources and adequately prepare for the winter season. They also see solid economic strength with a high level of GDP per capita and reform efforts in the context of the recovery plan. What could adjust the outlook back to stable is an easing of tensions on the issue of energy supply or a successful and, in particular, as soon as possible permanently reduced energy dependence on Russia.
Source: SITA
