S&P turns Slovakia view to negative

S&P said it changed its outlook for Slovakia to negative from stable and affirmed its A+ sovereign ratings.

“We revised the outlook to negative because we see risks that the E.U.'s ambition to transition away from Russian oil and gas could lead to a challenging economic situation for Slovakia, given that country's high dependence Russian energy. This adds to our expectations that secondary effects from the conflict will substantially hit Slovakia's economy, which has led us to revise down our growth projection for its economy to 2.1% in 2022, from 4.7% prior to the war,” the agency said in a press release.

“This downward revision reflects our expectations that the conflict's effects will hit the Slovak economy from several angles, especially persistent supply chain bottlenecks that continue to hit the automotive sector. Moreover, surging energy prices will hinder the manufacturing sector while generally higher inflation erodes household purchasing power and reduces domestic demand,” S&P added.

S&P noted it considers Slovakia’s debt levels manageable, and its debt service costs remain historically low.

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