The Slovak economy is projected to grow by 4.2% in 2021 and 5.2% in 2022. After a strict lockdown in early 2021, domestic demand will rebound from the second half of the year as vaccines continue to be rolled out and most containment measures are lifted. Investment will accelerate in 2022, aided by EU structural funds and the new EU Recovery and Resilience Facility. Unemployment will fall gradually, but still remain above pre-crisis levels at the end of 2022.
Fiscal policy should continue to be supportive until the recovery is firmly underway. EU funds provide an opportunity to implement ambitious structural reforms aimed at addressing long-standing key challenges, provided implementation is timely and efficient. Structural reforms are required to improve the uptake of digital technologies, access to early childhood education, and labour force participation by female, disadvantaged and older workers.