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Slovakia Country Risk Report 20 2018

Slovakia Country Risk Report 20 2018

Export-led growth of the previous years has translated to a visible pick-up in domestic demand. We expect domestic demand to remain robust, aided by a strong outlook for the consumer.

Downside risks to the growth outlook are building on account of the country's tightening labour market and this could gradually undermine Slovakia's status as a cheap manufacturing hub in the EU region.

The transition to a more services-based economy will be slow.

The ruling SMER-SD party lost its sole parliamentary majority after the March 2016 general election and the relatively weak multi-party coalition that emerged poses risks to political stability and effective policy formation. Further to that, the rising prominence of far-right and extremist parties poses a significant medium-term threat.

We believe Slovakia is on a sustainable fiscal trajectory with few immediate risks to its solid sovereign profile. Long-term demographic challenges are prominent, however, posing longer-term risks.

The current account will remain in deficit, but eurozone membership and a stable, long-term external funding structure minimise associ-ated risks and ensure a stable balance of payments position.


Executive Summary
Core Views
Key Risks
Chapter 1: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Growth Outlook
Growth To Edge Higher Amid Regional Slowdown
TABLE: BIG PROJECTS IN THE PIPELINE
GDP By Expenditure Outlook
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: PUBLIC CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECAST
TABLE: NET EXPORT FORECASTS
TABLE: GDP GROWTH FORECASTS
Outlook On External Position
TABLE: CAPITAL AND FINANCIAL ACCOUNT BALANCE
TABLE: TOP 5 GOODS IMPORTS, 2015
TABLE: TOP 5 GOODS EXPORTS, 2015
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
ECB Normalisation Finally Nearing
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
Currency Forecast
EUR: Rally To Be Limited
TABLE: BMI EUROZONE CURRENCY FORECAST
Chapter 2: 10-Year Forecast
The Slovak Economy To 2027
Growth Outpacing Eurozone Averages
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Chapter 3: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
Social Discontent Keeps Political Risk Elevated
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Slow Convergence With West Remains Core View
Chapter 4: Operational Risk
Operational Risk
TABLE: OPERATIONAL RISK
Business Crime
TABLE: BUSINESS RESPONSE TO WHITE COLLAR CRIME AND ORGANISED CRIME RISKS
Education
TABLE: SLOVAKIA AND OECD AVERAGE – STUDENT PERFORMANCE SCORES, 2015
Chapter 5: BMI Global Macro Outlook
Trade Tensions Take Centre Stage
TABLE: GLOBAL MACROECONOMIC FORECASTS
TABLE: DEVELOPED STATES – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: SLOVAKIA – MACROECONOMIC DATA & FORECASTS

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