IMF Staff Country Reports

This Selected Issues paper highlights consumption analysis based on distributional national accounts in Slovak Republic. Efforts to improve the quality and usability of DNA data should continue. In Slovakia, measures to increase income are essential to achieve robust consumption growth amid the challenges from demographic changes. Policies that encourage higher skilled jobs and labor force participation are important to maintain the favorable trend in inequality. An analysis using the data finds that to maintain robust consumption growth amid downward pressure from unfavorable demographic dynamics, an increase in consumption per person, primarily driven by income, will be necessary. This underscores the importance of policy measures to raise income growth, such as increasing productivity and encouraging labor force participation, especially among the elderly. The analysis shows that inequality, as well as the gender gap, has declined owing to a labor shift toward high-skill jobs and fewer unemployed household heads. In order to maintain these favorable trends, policies to encourage a shift toward higher skilled jobs and labor force participation, such as strengthening active labor market policies and addressing skill mismatches, will be important.