In the first half of 2025, Slovakia's economic growth slowed down, with GDP in the first quarter reaching only 0.9% year-on-year – the lowest level in 2 years. However, inflation remained around 4% and the labor market remained stable with an unemployment rate of ~5.3%. The government focused on budget restructuring, high-tech investment and energy transition.

Fiscal policy and macroeconomic management:

The government of Prime Minister Robert Fico focused on reducing the budget deficit (expected in 2025 ~4.7% of GDP) by increasing VAT from 20% to 23% and cutting inefficient spending. Public debt continued to increase, expected to reach ~61% of GDP by the end of the year. Meanwhile, Slovakia continues to cap household energy prices and increase pension spending, but will start tightening public sector spending from mid-2025.

Energy and security of supply:

Slovakia remains heavily dependent on energy imports from Russia. The government has said it will not support further energy sanctions without a viable alternative. However, the country continues to upgrade its internal capacity: the Mochovce-4 nuclear power plant, which is set to come online this year, will increase the share of nuclear power to ~65% of the national electricity mix. Renewable energy support programs (solar, household electricity sharing) continue to expand, although limited by grid capacity and slow disbursement of EU funds.

Transforming the automotive industry:

The automotive industry – which accounts for 35% of exports – is shifting strongly to electric vehicles. The first half of 2025 will see an acceleration of megaprojects such as the Volvo Cars plant in Košice, the EUR 1.2 billion InoBat–Gotion EV battery plant, and the Hyundai Mobis electric vehicle components plant in Nováky. These projects will not only add new industrial capacity but also contribute to the economic restructuring of the old coal-dependent regions.

High-tech and emerging industries:

The government is pushing ahead with its strategy for AI, semiconductors and digital transformation. Slovakia has established a national alliance “SK Chips”, launched a Semiconductor Packaging Competence Center with EU funding. In AI, the country will host the GPAI 2025 Summit and implement programs to support AI applications in public services. Tech startups, bioindustry, and innovation are supported by the recovery fund and the EIB, with a total loan package of EUR 240 million at the beginning of the year.

Overall, despite low growth and fiscal pressures, Slovakia is gradually reshaping its economy through strategic investments in clean energy, electric vehicles, AI and the semiconductor industry. With EU support and a determination to adjust policies, the country aims to achieve sustainable growth and become more competitive in the European industrial value chain in the coming years.