On 13 January 2022 the latest OECD Economic Survey of the Slovak Republic was issued.

The report notes that Slovakia’s recovery plan, supported by the EU, can give a boost to the economic recovery and growth, although there are downside risks from supply chain disruptions and a low vaccination rate.

The OECD considers that targeted policy support should continue for affected households and firms. Policies aiming to increase productivity are important for sustaining living standards in view of an aging population and the rapid declines in the working-age population.

Reforms to pensions, the labour market and healthcare are needed in the medium to longer term, in response to the challenge of the ageing population. In the immediate future vaccination is a priority, but after the pandemic the problem of population ageing will be vitally important. Government spending relating to the ageing population will rise rapidly in future years, increasing the fiscal burden that has already risen during the pandemic.

The proportion of the population at working age is projected to decrease by around 20% between 2021 and 2050. The decreasing numbers of people in the workforce will restrain economic growth. The economic pressures can be managed by extending working lives and facilitating workforce participation through pension, health and long-term care reforms. Encouragement of more labour participation by mothers, the low-skilled, minority ethnic groups and older workers can increase labour productivity.

Since 2000 Slovakia has generally been one of the fastest-growing OECD economies. Although the pandemic has hit the Slovak economy, the supportive policies including job retention schemes have restricted the impact of the pandemic on levels of employment.

The disruptions to global supply chains during the pandemic have slowed the economic recovery by restricting supplies in certain business sectors. Economic growth in Slovakia was 3.2% in 2021. The OECD report projects that Slovakia’s GDP growth will be around 5.0% in 2022 and 4.8% in 2023.

The Slovakian government plans to invest recovery funds from the EU in education, healthcare, research, more digitalisation and a greener economy. The aim is to create a climate for development of a strong and sustainable recovery. The OECD report notes that the planned reforms need to be implemented in a timely and effective manner to have the appropriate impact on the economic situation. The reforms need to result in improved education, adequate skill development for workers in a digital economy, support in development of new technologies, encouragement of more spending on research and development and enhancement of the business environment. This would equip Slovakia to benefit from the digital economy. Slovakia must encourage highly skilled workers from abroad to participate in the recovery and try to bring back citizens who emigrated for study.

With rising life expectancy and declining fertility rates, Slovakia’s population is ageing rapidly. OECD projections suggest that without measures to contain ageing-related costs, notably spending on pensions, health and long-term care, Slovakia’s public debt will rise significantly by 2050.