Slovakia: A success for liberalism

3 min
Manfred Stamer
Manfred Stamer Senior Economist for Emerging Europe and the Middle East

 

On 30 March, Zuzana Caputova won the run-off in the presidential election against Maros Sefcovic, Slovakia’s European commissioner, with 58.4% of the vote. Although the president’s role in Slovakia is largely ceremonial, the victory of the liberal, pro-European and anti-corruption activist Caputova is remarkable as it also represents a rare victory for liberalism in an age of populism, especially in Central Europe. On the economic front, Slovak real GDP growth accelerated notably to +4.1% in 2018 (from +3.2% in 2017) driven by a strong rebound in gross capital formation (+8.9%, up from +1.1% in 2017) and a solid expansion of consumer spending (+3%) while public spending increased more modestly (+1.9). Exports rose by +4.8% but were outpaced by imports at +5.3%, so that net exports made a negative contribution to 2018 growth. Looking forward, we forecast annual growth to slow down to +3.4% in 2019, mainly as a result of weaker external demand, especially lower imports from the Eurozone (notably from Germany). The automotive industry is likely to be more affected than other sectors.