Suffocated growth, new investment at zero, the departure of brains and capital

The economy is standing still. Instead of growth, we are suffocating ourselves. Foreign investors are turning their backs on Slovakia, and those who are still here are putting money only into maintaining what is currently being produced. Companies are losing the reason to invest, people the reason to stay. The best students and capable experts are therefore increasingly leaving the country. The government, meanwhile, is building the budget on money that our economy will never produce. If the course does not change, in three years we will run out of orders and there will be nothing to produce. Industry, jobs and the state budget will collapse.

The accelerated fall of forecasts: from the promised growth to stagnation

A year ago the finance ministry was still counting on growth of 2.2 % in 2025 and 2.4 % in 2026. The latest forecast of the National Bank of Slovakia speaks of 0.8 % this year and 0.5 % next year. Last year, meanwhile, we grew by 2.1 %. A single year of harsh measures and bad market conditions was enough for Slovak growth to shrink to a third of the original expectations. „If the economy does not grow, the debt cannot be managed. The share of debt in GDP is rising, the deficit is not falling and we are getting into a negative spiral,“ explains the president of the Association of Industrial Unions and Transport (APZD), Alexej Beljajev. „One can get out of debt only through growth. And it is precisely that which we have braked,“ he adds.

Billions that will not come, although they are planned in the budget

In the budget, the state counted on GDP in 2026 reaching 147.3 billion euros. On the current trajectory, however, we are heading only towards 142.4 billion euros. The difference of 5 billion means missing resources for schools, hospitals and debt repayments – money that the budget counts on, but the economy will not produce. „That is a direct consequence of the braking of growth, investment and confidence,“ adds the general secretary of APZD, Andrej Lasz.

A vast gap separates us from the goal

If the government wants to push the deficit down to three percent by 2027, as we committed to the European Union, the economy would have to grow ten times faster than it grows today. Instead of the needed pace of around 5.1 %, however, we are moving only at the level of 0.5 %. The difference is thus vast and insurmountable without a fundamental change. „To expect a three-percent deficit from this economy is like wanting a runner with tied legs to win a marathon. First we must untie the hands and legs of companies, only then can we move,“ Lasz describes.

Consolidation without result: 7 billion collected, the deficit did not budge

„If two years ago we started with a deficit of 5.2 % and after two years of consolidation and seven billion extra we are again at 5.2 %, then it is clear that there is a problem somewhere. And that problem is the unrelenting expenditure of the government,“ he explains.

Forget about the brain hub

Those who should build its future are leaving Slovakia. We are losing both talents and capital. The Institute of Educational Policy points out that in 2024 as many as 61 % of the best maths school-leavers studied abroad. In 2016 it was „only“ 46 %. And it is precisely these young people that Slovak industry needs the most.

Even those who stay do not have it easy. Slovak employees pay higher taxes and contributions than their colleagues in the surrounding V4 countries. Their consumption is made more expensive by higher VAT and the transaction tax. Gross wages do seem to be rising, but real purchasing power is standing still.

„A Slovak manager already today has, compared with a Czech colleague, 835 euros less in net pay at the same gross wage,“ says APZD vice-president Alexander Matušek. „For higher contributions, people do not receive any value in return. In practice it is just another tax. And whoever claims that the pay of politicians and deputies will fall just as it does for citizens should take a look at the flat-rate allowances. The reality is completely elsewhere.  

Consolidation in net terms falls most heavily on employees and precisely on those who pull the economy forward. We can forget about the brain hub. We will be glad if at least the assembly plant remains here.“

But even that is under threat. Investment has plunged to a minimum, new projects are not coming and money goes only into the necessary maintenance of existing factories. Eurostat confirms that all our neighbours in the V4 region invest more, even though they themselves face problems. „Besides the V4 countries, we can no longer compete even with the western EU countries, or with the countries of the Iberian Peninsula. Our companies are not managing to obtain new products. If we do not immediately start improving our competitiveness, the industry that we have here will shrink,“ warns Alexander Matušek.

The way out of debt leads only through growth

„A country with growth of 0.5 % cannot afford to live as if it had 5 %,“ says Alexej Beljajev and at the same time warns: „Slovakia has found itself in a trap of mediocrity. We want average people, average companies and average wages. Anything above that we immediately burden with higher taxes. But in mediocrity it is already impossible to earn money today. And from what do we then want to finance public services, when we punish success instead of supporting it? What exactly do we want to make of this state?“

If we do not want only average results and an average life, we must turn the course around. Slovakia needs steps that will return its future to it. That means switching off measures that increase costs and setting a growth trajectory. Removing as soon as possible the transaction tax that deters investors. Subsequently presenting a credible plan for the gradual reduction of the corporate income tax, so that companies again see the point of planning and investing in Slovakia. We must return a competitive price of energy to industry, get renewable energy sources moving and finally put order into waste management, so that Slovakia stops disappearing from the map of investors.

On the labour side, it is essential to adopt measures for the gradual reduction of taxes for natural persons, to reduce the contribution caps and to prepare a programme that will reverse the departure of talents and bring back those who today study and work abroad. And above all, to stop adding new uncovered expenditure that the economy cannot earn.

Instead of real support for growth, the government keeps buying the favour of voters with appealing benefits. The thirteenth pension, blanket energy subsidies, free trains and lunches are, at today's pace of growth, unaffordable.

„Companies need certainty. When they know that burdens will fall, they plan and invest here. When a new tax is added every year, they leave. Unless something changes, Slovakia will have nothing to produce, nothing to live on and nothing with which to finance its own state. If, however, we turn the course around, we can reverse it. There is still time. Not much, but enough, if we use it,“ concludes APZD vice-president Alexander Matušek.

SOURCE: APZD