Page 62 - CE Outlook Regions 2022

In the long term, the country is to face the challenge of adapting to a
shift towards electric car production in light of changing regulatory
frameworks and consumer demand.

3.4.4 Energy & power
The expected increase in energy prices for households in Slovakia
is coming to fruition. According to the Office for the Regulation of
Network Industries (URSO), in 2022, Slovak electricity prices for
households are likely to see a 15% increase (and gas prices a 10%
increase).

At the end of 2021, URSO published new caps for regulated prices
of natural gas and electricity valid as of January 1, 2022.
Households will thus pay more for gas (around €5.50 to €230 per
year) while their annual electricity bill will increase by about €47 to
€172.

Maintaining the current price levels of year-ahead contracts for
energy commodities in Slovakia represents an upward risk to the
inflation outlook for 2023.

3.4.5 Construction

According to EC, the outlook for the Slovak broad construction
sector is moderate. The volume index of production of the broad
construction sector, construction of buildings and construction of civil
engineering are expected to reach a growth of 19.9% in 2022.

In the long-term, the Slovakia construction output is projected to
trend around 1.9% and 2.2% in 2022 and 2023, respectively, shows
the Trading Economics macro outlook.

Due to COVID-19 pandemic, the outlook of the property market is
constantly changing in Slovakia. Although Slovakia’s housing market
growth is expected to slow down in the short term, it is also
forecasted to recover soon given that property demand, both from
foreign as well as local investors, continues to be fundamentally
strong. The construction sector is expected to receive visible support
from 2022 onwards, as the EU RRF will start to be utilized.

Despite the coronavirus pandemic uncertainties, real estate
financing has remained an important part of banks’ business in
Slovakia. According to KPMG analysis, a majority of banks in
Slovakia view real estate financing as having moderate strategic
importance and almost 30% of banks foresee no change in the size
of the whole banking sector’s real estate lending portfolio in the next
12-18 months. Average loan sizes vary from €7-€18mn, while the
preferred range is higher, between €17mn-€32mn.

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