Economic activity rebounded in the second quarter after the sharp falls earlier on. Notwithstanding continued positive growth in the third quarter, annual GDP is expected to fall by close to 6% in 2009. Activity will gradually pick up in 2010 owing to a brighter outlook for world trade growth and a resumption of inflows of foreign direct investment, and growth should reach an annual rate of above 4% in 2011. The strong increase in unemployment is expected to gradually level off. With substantial slack in the economy, consumer price inflation is expected to remain fairly low.

After several years of exceptionally high growth, GDP is expected to contract this year. Exports will be the main drag on activity, followed by private investment. Growth is projected to recover slowly during the course of 2010 due to a brighter outlook for world trade.

Although the Slovak Republic will continue to maintain the highest growth rate among OECD countries over the next two years, activity is expected to decelerate significantly in 2009. In particular investment spending and trade growth are likely to be adversely affected by the effects of the financial crisis. Growth is envisaged to return to close to its potential rate towards the end of the projection horizon. Inflation rates should decline from their currently high levels, but to stay above euro area levels.

Economic growth is projected to ease to 7% by 2009 as the rate at which new export-oriented manufacturing capacity coming on stream declines. Unemployment is projected to fall to about 9.5% in 2009. Further disinflation will be slowed by higher food prices, increases in indirect taxes and the assumed euro changeover in 2009.