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Economy of Slovakia

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Economy of Slovakia
Headquarters of Slovakia's central bank in Bratislava
CurrencyEuro (EUR, €)
Calendar year
Trade organisations
EU, WTO, OECD
Country group
Statistics
PopulationIncrease 5,457,873 (1 January 2020)[3]
GDP
  • Increase $127 billion (nominal, 2022 est.)[4]
  • Increase $203 billion (PPP, 2022 est.)[4]
GDP rank
GDP growth
  • 3.9% (2018) 2.4% (2019)
  • −7.1% (2020e) 6.9% (2021e)[4]
GDP per capita
  • Increase $23,268 (nominal, 2022 est.)[4]
  • Increase $37,136 (PPP, 2022 est.)[4]
GDP per capita rank
GDP by sector
  • 1.5% (2020 est.)[4]
  • 2.8% (2019)[4]
  • 2.5% (2018)[4]
Population below poverty line
  • Positive decrease 12.6% (2013)[6]
  • Steady 16.3% at risk of poverty or social exclusion (AROPE, 2018)[7]
Positive decrease 20.9 low (2018, Eurostat)[8]
Labour force
  • Decrease 2,736,717 (2019)[11]
  • Increase 72.4% employment rate (Target: 72%; 2018)[12]
Labour force by occupation
Unemployment
  • Negative increase 6.8% (August 2020)[13]
  • Negative increase 19.8% youth unemployment (15 to 24 year-olds; July 2020)[14]
Average gross salary
€1,421 / $1,672 monthly (December, 2021)[15]
€1,108 / $1,303 monthly (December, 2022)
Main industries
automobiles; metal and metal products; electricity, gas, coke, oil, nuclear fuel; chemicals, synthetic fibers, wood and paper products; machinery; earthenware and ceramics; textiles; electrical and optical apparatus; rubber products; food and beverages; pharmaceutical
External
ExportsIncrease $80.8 billion (2017 est.)[5]
Export goods
vehicles and related parts 27%, machinery and electrical equipment 20%, nuclear reactors and furnaces 12%, iron and steel 4%, mineral oils and fuels 5% (2015 est.)
Main export partners
ImportsIncrease $80.07 billion (2017 est.)[5]
Import goods
machinery and electrical equipment 20%, vehicles and related parts 14%, nuclear reactors and furnaces 12%, fuel and mineral oils 9% (2015 est.)
Main import partners
FDI stock
  • Increase $69.92 billion (31 December 2017 est.)[5]
  • Increase Abroad: $21.29 billion (31 December 2017 est.)[5]
Decrease −$2.005 billion (2017 est.)[5]
Negative increase $75.04 billion (31 March 2016 est.)[5]
Public finances
  • Positive decrease 48.0% of GDP (2019)[16]
  • Increase €45.202 billion (2019)[16]
  • €1.2 billion deficit (2019)[16]
  • −1.3% of GDP (2019)[16]
Revenues41.5% of GDP (2019)[16]
Expenses42.8% of GDP (2019)[16]
Economic aid$235 million in available EU structural adjustment and cohesion funds (2004)
Increase $3.622 billion (31 December 2017 est.)[5]
All values, unless otherwise stated, are in US dollars.


The economy of Slovakia is based upon Slovakia becoming an EU member state in 2004, and adopting the euro at the beginning of 2009. Its capital, Bratislava, is the largest financial centre in Slovakia. As of Q1 2018, the unemployment rate was 5.72%.[20]

Due to the Slovak GDP growing very strongly from 2000 until 2008 – e.g. 10.4% GDP growth in 2007 – the Slovak economy was referred to as the Tatra Tiger.

History

Since the establishment of the Slovak Republic in January 1993, Slovakia has undergone a transition from a centrally planned economy to a free market economy, a process which some observers were to believe was slowed in the 1994–98 period due to the crony capitalism and other fiscal policies of Prime Minister Vladimír Mečiar's government. While economic growth and other fundamentals improved steadily during Mečiar's term, public and private debt and trade deficits also rose, and privatization was uneven. Real annual GDP growth peaked at 6.5% in 1995 but declined to 1.3% in 1999.

Two governments of the "liberal-conservative" Prime Minister Mikuláš Dzurinda (1998–2006) pursued policies of macroeconomic stabilization and market-oriented structural reforms. Nearly the entire economy has now been privatized, and foreign investment has picked up. Economic growth exceeded expectations in the early 2000s, despite recession in key export markets. In 2001 policies of macroeconomic stabilization and structural reform led to spiraling unemployment. Unemployment peaked at 19.2% (Eurostat regional indicators) in 2001,[21] and though it has fallen to (depending on the methodology) 9.8%([citation needed] or 13.5%[citation needed] as of September 2006, it remains a problem. Solid domestic demand boosted economic growth to 4.1% in 2002. Strong export growth, in turn, pushed economic growth to a still-strong 4.2% in 2003 and 5.4% in 2004, despite a downturn in household consumption. Multiple reasons entailed a GDP growth of 6% in 2005. Headline consumer price inflation dropped from 26% in 1993 to an average rate of 7.5% in 2004, though this was boosted by hikes in subsidized utilities prices ahead of Slovakia's accession to the European Union. In July 2005, the inflation rate dropped to 2.0% and is projected at less than 3% in 2005 and 2.5% in 2006. In 2006, Slovakia reached the highest economic growth (8.9%) among the members of OECD and the third highest in the EU (just behind Estonia and Latvia). The country has had difficulties addressing regional imbalances in wealth and employment.[22] GDP per capita ranges from 188% of EU average in Bratislava to only 54% in Eastern Slovakia.

GDP growth

The development of Slovakia's GDP according to the World Bank:[23]

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
% GDP 3.3 4.5 5.4 5.2 6.7 8.4 10.8 5.6 −5.4 5.0 2.8 1.6 1.5 2.7 4.2 3.1 3.2 4.1

In 2007, Slovakia obtained the highest GDP growth among the members of OECD and the EU, with the record level of 14.3% in the fourth quarter.[24] In 2014, GDP growth was 2.4% and in 2015 and 2016 Slovakia's economy grew 3.6% and 3.3% respectively. For year 2018, National Bank of Slovakia predicts raise of GDP by 4%.

Foreign investments

Central business district in Bratislava

Foreign direct investment (FDI) in Slovakia has increased dramatically. Cheap and skilled labor, a 19% flat tax rate for both businesses and individuals, no dividend taxes, a weak labor code, and a favorable geographical location are Slovakia's main advantages for foreign investors. FDI inflow grew more than 600% from 2000 and cumulatively reached an all-time high of, US$17.3 billion in 2006, or around $18,000 per capita by the end of 2006. The total inflow of FDI in 2006 was $2.54 billion. In October 2005 new investment stimuli introduced – more favorable conditions to IT and research centers, especially to be located in the east part of the country (where there is more unemployment), to bring more added value and not to be logistically demanding.

Origin of foreign investment 1996–2005 – the Netherlands 24.3%; Germany 19.4%, Austria 14.1%; Italy 7.5%, United States (8th largest investor) 4.0%. Top investors by companies: Deutsche Telekom (Germany), Neusiedler (Austria), Gaz de France (France), Gazprom (Russia), U.S.Steel (U.S.), MOL (Hungary), ENEL (Italy), E.ON (Germany)...

Foreign investment sectors – industry 38.4%; banking and insurance 22.2%; wholesale and retail trade 13.1%; production of electricity, gas and water 10.5%; transport and telecommunications 9.2%.

Foreign direct investment " on green field"

  • inflows -2003: US$756 million,2004: US$1261 million,2005: US$1908 million
  • outflows-2003: US$22 million,2004: -144 million USD,2005: US$146 million

Services

Slovak service sector grew rapidly during the last 10 years and now employs about 69% of the population and contributes with over 61% to GDP. Slovakia's tourism has been rising in recent years, income has doubled from US$640 million in 2001 to US$1.2 billion in 2005. [citation needed]

Industry

Slovakia became industrialized mostly in the second half of the 20th century. Heavy industry (including coal mining and the production of machinery and steel) was built for strategic reasons because Slovakia was less exposed to the military threat than the western parts of Czechoslovakia. After the end of the Cold War, the importance of industry, and especially of heavy industry, declined. In 2010, industry (including construction) accounted for 35.6% of GDP, compared with 49% in 1990. Nowadays, building on a long-standing tradition and a highly skilled labor force, main industries with potential of growth are following sectors: Automotive, Electronics, Mechanical engineering, Chemical engineering, Information technology.

The automotive sector is among the fastest growing sectors in Slovakia due to the recent large investments of Volkswagen (Bratislava), Peugeot (Trnava), Kia Motors (Žilina) and since 2018 also Jaguar Land Rover in Nitra. Passenger car production was 1,040,000 units in 2016, what makes Slovakia the largest automobile producer in produced cars per capita.[25] Other big industrial companies include U.S. Steel (metallurgy), Slovnaft (oil industry), Samsung Electronics (electronics), Foxconn (electronics), Mondi SCP (paper), Slovalco (aluminum production), Hyundai Mobis (automotive), Continental Matador (automotive) and Whirlpool Corporation. In 2006, machinery accounted for more than a half of Slovakia's export.

Largest companies by revenue

Company Revenue
(EUR millions)[26]
Volkswagen Slovakia 7,549
Kia Motors Slovakia 5,184
Slovnaft 3,421
Všeobecná zdravotná poisťovňa 2,981
PCA Slovakia 2,694
U. S. Steel Košice 2,619
Samsung Slovakia 2,377
Slovenské elektrárne 2,183
Slovenský plynárenský priemysel 1,493
Tesco stores 1,451

Largest companies by profit

Company Profit
(EUR millions)[27]
SPP Infrastructure 645
U. S. Steel Košice 499
Slovnaft Eustream 352
Slovenský plynárenský priemysel 318
Kia Motors Slovakia 209
Continental Matador 175
Volkswagen Slovakia 173
Slovenská sporiteľňa 162
Všeobecná úverová banka 160
SPP distribúcia 153

Agriculture

In 2016, agriculture accounted for 3.6% of GDP (compared to 6.9% in 1993) and occupied about 3.9% of the labor force (down from 10.2% in 1994). Over 40% of the land in Slovakia is cultivated. The southern part of Slovakia (bordering with Hungary) is known for its rich farmland. Growing wheat, rye, corn, potatoes, sugar beets, grains, fruits and sunflowers. Vineyards are concentrated in Little Carpathians, Tokaj, and other southern regions. The breeding of livestock, including pigs, cattle, sheep, and poultry is also important.

Slovakia produced in 2018:

In addition to smaller productions of other agricultural products, like grape (52 thousand tons).[28]

Information technology

In recent years, service and high-tech-oriented businesses have prospered in Slovakia. Many global companies, including IBM, Dell, Lenovo, AT&T, SAP, Amazon, Johnson Controls, Swiss Re and Accenture, have built outsourcing and service centres in Bratislava[29] and Košice (T-Systems, Cisco Systems, Ness, Deloitte[30]). Slovak IT companies, including ESET, Sygic and Pixel Federation have headquarters in Bratislava.

Innovation

According to a recent report by the European Commission, Slovakia (along with some other Central and Eastern European economies) is low on the list of EU states in terms of innovation (Slovakia ranks 22nd). Within the EU, it ranks next to last on knowledge creation and last for innovation and entrepreneurship. In the process of transition to a knowledge economy, it particularly lacks investment into education and a broader application of IT. The World Bank urges Slovakia to upgrade information infrastructure and reform the education system. The OECD states that a stronger product market competition would help.

In March 2006, the Slovak government introduced new measures to implement the Action Plan for R&D and Innovation. The program covers the period from 2006 to 2010. The RDA is expected to launch at least one call for the expression of interests related to this program each year. The annual budget for the program will be set by the RDA. The overall amount available for the program depends on annual national budget resources and is likely to vary from year to year. Following an increase of around 50% in budget resources, the RDA disposes of a total budget of €19.31 million in 2006.

Labour

The minimum wage in Slovakia is set at €520 per month,[31] the average salary for 2017 was €1052 per month,[32] in the Bratislava region in 2017 the average salary was €1527 per month.[33] As of February 2018 the unemployment rate stood at 5.88%.[34]

Statistics

A proportional representation of Slovakia's exports, 2019

Currency switch to the euro

Slovakia switched its currency from the Slovak crown (SK-slovenská koruna) to the Euro on 1 January 2009, at a rate of 30.1260 korunas to the euro.

Foreign trade[35]

Year 2008 2009 2010 2011 2012 2013 2014 2015 2016
Exports € bn 49.5 39.7 35.0 56.8 62.8 64.4 64.8 73.12 74.35
Imports € bn 50.3 38.8 34.6 55.8 59.2 60.1 60.2 71.09 71.47

See also

References

  1. ^ "World Economic Outlook Database, April 2019". IMF.org. International Monetary Fund. Retrieved 29 September 2019.
  2. ^ "World Bank Country and Lending Groups". datahelpdesk.worldbank.org. World Bank. Retrieved 29 September 2019.
  3. ^ "Population on 1 January". ec.europa.eu/eurostat. Eurostat. Retrieved 13 July 2020.
  4. ^ a b c d e f g h "World Economic Outlook Database, April 2022". IMF.org. International Monetary Fund. April 2022. Retrieved 19 April 2022.
  5. ^ a b c d e f g h i j k "CIA World Factbook". CIA.gov. Central Intelligence Agency. Retrieved 7 January 2019.
  6. ^ "Poverty headcount ratio at national poverty lines (% of population) – Slovak Republic". data.worldbank.org. World Bank. Retrieved 19 October 2019.
  7. ^ "People at risk of poverty or social exclusion". European Commission. Retrieved 13 January 2020.
  8. ^ "Gini coefficient of equivalised disposable income – EU-SILC survey". European Commission. Retrieved 20 December 2019.
  9. ^ "Human Development Index (HDI)". hdr.undp.org. HDRO (Human Development Report Office) United Nations Development Programme. Retrieved 11 October 2022.
  10. ^ "Inequality-adjusted HDI (IHDI)". hdr.undp.org. UNDP. Retrieved 11 October 2022.
  11. ^ "Labor force, total – Slovak Republic". data.worldbank.org. World Bank. Retrieved 1 November 2019.
  12. ^ "Employment rate by sex, age group 20-64". ec.europa.eu/eurostat. Eurostat. Retrieved 30 May 2019.
  13. ^ "Unemployment by sex and age – monthly average". appsso.eurostat.ec.europa.eu. Eurostat. Retrieved 4 October 2020.
  14. ^ "Unemployment rate by age group". data.oecd.org. OECD. Retrieved 8 September 2020.
  15. ^ "Průměrná mzda v roce 2021: Jak na mzdy dopadl koronavirus? Jaká je průměrná mzda u našich sousedů?".
  16. ^ a b c d e f "Euro area and EU27 government deficit both at 0.6% of GDP" (PDF). ec.europa.eu/eurostat. Eurostat. Retrieved 28 April 2020.
  17. ^ "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
  18. ^ a b c Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian. Retrieved 28 May 2011.
  19. ^ "Scope revises Slovakia's Outlook to Negative from Stable, affirms rating at A+". Scope Ratings. Retrieved 29 October 2022.
  20. ^ "Statistical Office of the Slovak Republic". Archived from the original on 24 September 2018. Retrieved 12 March 2018.
  21. ^ . 4 July 2007 https://web.archive.org/web/20070704030244/http://www.icegec.hu/eng/publications/_docs/news/news_2006_february.pdf. Archived from the original (PDF) on 4 July 2007. {{cite web}}: Missing or empty |title= (help)
  22. ^ Votruba, Martin. "Regional Wealth". Slovak Studies Program. University of Pittsburgh. Retrieved 10 April 2010.
  23. ^ "GDP growth (annual %)". data.worldbank.org. World Bank. Retrieved 8 April 2019.
  24. ^ "Gross domestic product in the 4th quarter of 2007". Statistical Office of the Slovak Republic. 4 March 2008. Retrieved 14 February 2008.
  25. ^ "Slovensko kraľuje výrobe áut vo svete, dosiahli sme nový rekord" (in Slovak). HNonline. 17 January 2017. Retrieved 25 June 2017.
  26. ^ "Najväčšie firmy na Slovensku: zoradené podľa tržieb". finstat.sk.
  27. ^ "Firmy na Slovensku zoradené podľa zisku". finstat.sk.
  28. ^ "Slovakia production in 2018, by FAO".
  29. ^ "Lenovo invests in Slovakia with new jobs". Slovak Investment and Trade Development Agency. 20 April 2006. Retrieved 25 April 2007.
  30. ^ "Členovia – Košice IT Valley". kosiceitvalley.sk.
  31. ^ "Minimálna mzda 2018". Minimalnamzda.sk. Retrieved 1 March 2018.
  32. ^ "Priemerná mzda". minimalnamzda.sk. Retrieved 1 March 2018.
  33. ^ "Rozloženie platov v Bratislavskom kraji – Platy.sk". platy.sk.
  34. ^ "Nezamestnanosť ďalej klesá, bez práce je 5,88 percenta ľudí". ekonomika.sme.sk. Retrieved 1 March 2018.
  35. ^ "CEE Basic Data – Key economic indicators and forecasts". Ceemarket.com. Retrieved 3 March 2015.
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