Slovakia in 2025: Navigating Economic Reforms and Democratic Crossroads
Current State of Affairs
Slovakia, like much of the EU, is currently facing significant headwinds related to geoeconomic fragmentation and high energy costs. While growth has maintained stability in recent years, it has come at the cost of an increased fiscal deficit.
Economic Outlook
Economic growth is projected to reach 1.9% in 2025, with expectations of rising to 2.1% in 2026. The current fiscal consolidation efforts are expected to impact growth directly through reduced government spending and indirectly as higher taxes affect private consumption, though this is partially offset by household energy support and EU-funded investments.
Private consumption growth is anticipated to slow down, primarily due to VAT tax increases in the first quarter and economic uncertainty. However, steady wage growth matching consumer price inflation is expected to provide some stimulus to private consumption.
Political and Democratic Challenges
According to the 2025 Varieties of Democracy (V-Dem) report, Slovakia has been placed on an autocratisers ‘watchlist’, being one of only three European countries showing concerning signs of democratic backsliding. The country’s liberal democracy score has declined significantly, falling from 76.2 in 2022 to 58.4 in 2024, reaching levels not seen since before 1998.
International Relations
Despite recent political developments, Slovakia maintains its key security partnerships with the United States and Poland, while its major economic partners remain western nations, including Germany, Italy, and Czechia. However, current political leadership’s attempts to position Slovakia as a ‘bridge between East and West’ have created tensions with both Czechia and the EU.
Future Prospects
The country faces several socio-economic challenges, including poor education outcomes, low pre-school enrollment rates, and weak health outcomes with one of the lowest life expectancies in the EU. Slovakia’s future competitiveness and productivity growth depend on improving innovation and promoting sectoral diversification, though these efforts are currently constrained by the low quality of public research and limited business cooperation.
