Economic trends
Since 2000, Slovakia has been experiencing a sustained and steady GDP growth rate, notably induced by its integration into the European Union in May 2004.
The taxation system is well-adapted to the needs of trade and the workforce is highly qualified. The country also benefits from an advantageous geographical location, being located at the crossroads of Central Europe. Inflation is under control and the budgetary deficit is in constant decrease, mainly due to the major structural reforms set in place in the preparation process to its integration into the Euro zone. The disadvantage of these reforms is that they have created a load on domestic demand and they lower the potential of economic growth.
The Slovak economy has been affected by the financial crisis. The country has undergone into a global economic slowdown. Many industrial sites have closed and the population has seen its purchasing power decrease. The integration of the country into the Euro zone, which made disappear the risks in foreign market exchange, has allowed Slovakia to fight better the effects of the crisis. The situation has globally improved in the country and the chiefs of Slovak large companies predict positive perspectives for 2011 and 2012. The country should experience a growth of more than 4% in 2011, one of the largest growth rates of the countries in Central Europe.
Main branches of industry
The agriculture sector is not much developed in Slovakia and it represents less than 3.5% of the GDP. The main agricultural products in the country are cereals, potatoes, sugar beets and grapes. The mountainous area of Slovakia has vast forests and pastures which are used for intensive sheep grazing, and it is rich in mineral resources including iron, copper, lead, and zinc.
The secondary sector represents about a third of the GDP. The heavy industry sector such as metal and steel are still in a restructuring phase. High value-added industries such as electronics, engineering and petro-chemicals are installed in the western part of the country. Some sectors, like the automobile and consumer goods, offer attractive investment opportunities to foreign investors.
The services sector represents about 60% of the GDP. It is dominated by trade and real estate. The development of tourism can also become an important sector for the Slovak economy in the next following years.
International trade
The share of foreign trade in the country’s GDP has reached more than 200%. Due to the large energy imports from Russia, as well as substantial imports of machinery and electrical & electronic equipment used in its growing automobile and energy sectors, Slovakia’s cost of imports remains very high. Nevertheless, the dynamics of the tertiary sector and the potential in the field of automobile export should, in time, allow an equilibrium in its trade balance. Slovakia's three main suppliers are Germany, the Czech Republic and Russia. Its three main clients are Germany, the Czech Republic and Austria.
The global economic crisis had a very negative impact in some industrial sectors, especially in the automobile. As a matter of fact, the decrease in demand in the rest of Europe has affected the Slovak production in its factories. However, positive signs have appeared at the level of foreign trade in 2010. The situation in Germany, one of the main trading partners of Slovakia, has been gradually improving and the demand of Slovak products from Germany should revive in 2011.
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Last updates: February 2012
