Rapid increase in interest rates has boosted profits of Slovak banks to record levels, although it also led to lower demand for loans. New government that formed in October approved a plan to tax Slovak banks with additional 30% windfall tax. The extra 30% tax will be effective from 2024 and will then gradually decrease to reach 15% in 2027 and 4% from 2028 on. |
Robert Fico's SMER comes in first, but the main winner is Hlas-SD, who will be the kingmaker. The losers are previous coalition parties, extremist parties and polling companies. |
Inflation has unexpectedly shot up to levels last seen in the early 80ies due to a multitude of shocks. As some inflation drivers have been fading, inflation is now expected to come down quickly. However, wage growth as a reaction to the surge in consumer prices has picked up, which will lead to some stickiness. Moreover, some structural elements speak against a return to the lowflation era of the 2010s. |
At the beginning of 1993, the political map expanded and after a peaceful division, Czechoslovakia was replaced by the independent countries of the Czech Republic and Slovakia. Developments over the last 30 years have often diverged and while the Czech Republic has taken a more proactive approach to integration from the start, Slovakia has managed to push integration further by joining the euro area. After 30 years, the two countries maintain a strong relationship and face new - often similar, often quite different - challenges. |
A later rise in interest rates as compared to non-euro neighbours let Slovak banks enjoy rather solid loan growth for the big part of 2022. By the same token, the continuing monetary tightening is expected to be positive for banks' lending margins in 2023, while access to EU funds will support economic growth in the overall more challenging environment. Meanwhile, risks of additional taxation shall be watched. |