The Organisation for Economic Co-operation and Development (OECD) has stated in its latest report that the Slovak economy is expected to maintain steady growth, especially due to domestic demand. The report states that Slovakia's economic growth slowed down at the end of 2018 due to weakening external influences. Domestic demand, however, has remained solid. The OECD holds the opinion that the low unemployment rate and increasing salaries will support Slovak household consumption. At the same time, the growth of investments will also stay strong thanks to favourable financial conditions and contributions from EU structural funds. Although foreign demand is dropping, the newly operating Jaguar Land Rover car plant in the area of Nitra will support exports. Consumer price inflation will stay above the level of 2 percent, as the situation on the labour market is ever more tense from the viewpoint of the available labour force.
The Government is expected to maintain a balanced state budget in 2019; however, the risk that there will be a deficit has increased. According to the OECD, the Government should therefore adjust its financial policies, in order to achieve its planned goals. The Government should also increase the efficiency of the public sector. The reform of the education system and measures for bolstering the integration of Roma are of special importance. In terms of demographics, Slovakia has one of the fastest ageing populations in the OECD, which will significantly increase the country's expenditure in the future. This fiscal pressure has recently been increased by capping the retirement age at 64 years in the Constitution. The OECD expects the rate of growth of the Slovak economy to drop to 3.5 percent from last year's 4.1 percent, with another slight drop to 3.4 percent in 2020. The average inflation rate should stand at 2.6 percent this year and at 2.7 percent in 2020.
