The economy of Slovakia is a developed export-oriented economy with a high-income advanced economy. It is characterized by its high GDP per capita, low unemployment rate, and strong industrial base. Slovakia is a member of the European Union (EU) and is part of the Eurozone. Since joining the EU in 2004, Slovakia has seen an impressive economic growth, with GDP growth reaching 5% in 2014. The country has also seen a steady increase in foreign direct investment (FDI), which reached €3.3 billion in 2018.
According to cheeroutdoor, the Slovakian economy has been strongly influenced by its accession to the EU, with exports and imports increasing significantly since that time. In 2018, exports accounted for almost two-thirds of Slovakia’s GDP while imports accounted for nearly one-third of it. The main export partners are Germany, Czech Republic, Austria and Poland while the main import partners are Germany, Czech Republic and Russia. As a member of the EU single market, Slovakia enjoys free movement of goods within the bloc as well as access to other markets such as North America and Asia Pacific through free trade agreements with countries such as Canada and South Korea respectively. In addition to this, Slovakia has signed several bilateral agreements with other countries such as China which have helped facilitate increased trade between them both.
The Slovakian government has implemented a number of reforms over recent years in an effort to improve its economic performance including tax reforms which have lowered corporate taxes from 22% to 21%. In addition to this there have been efforts to reduce red tape for businesses operating in Slovakia by simplifying administrative procedures related to starting up businesses and registering property rights. These measures have had positive influences on FDI flows into the country over recent years leading to higher levels of foreign investment into the country’s manufacturing sector as well as into research & development activities which will help further bolster economic growth in future years.
Economics and business
The industry is of great importance to Slovakia’s business. In the country there are many large industrial companies mainly in industries such as car manufacturing, home electronics and steel and aluminum production.
During the 1990s, the country has attracted many foreign investors, nowadays a large part of the business sector, including most of the banking sector and the largest industries, is overseas. Privatization, tax reform, relatively cheap and well-educated labor and an advantageous geographical location have meant that the country during the 00s enjoyed good economic growth. After a few good years, however, GDP growth was down 0.9 percent in 2013 to increase again in the years to come. However, the regional differences in the country are still large, and it is mainly the metropolitan area that has benefited.
Background
Abbreviated as SVK by abbreviationfinder.org, Slovakia constituted the weakest resource and industry in terms of the former Czechoslovakia, with an old and oversized industry. During the 1990s, industrial closures and consequent unemployment hit the country hard. In 1990-96, the country’s GDP fell by an average of 1.2 percent per year, but during the latter part of the period the economy recovered and in 1995-96 GDP grew by close to 7 percent per year. The reasons for the recovery were mainly low-valued currency, import duties to protect the domestic industry and increased exports. The rate of privatization was considerably lower than in the Czech Republic. During the 1990s, the new state had also been received relatively coldly by foreign investors.
At the beginning of the 2000s, however, there was a marked economic improvement and foreign investment in the country increased. A privatization of the state banks was initiated and several large state-owned companies were sold to private investors. In 2004, a uniform tax of 19 percent was introduced, among other things, to further attract foreign investors. After its introduction, the country has received a large influx of foreign companies, mainly in the automotive sector. However, as part of the country’s ambition to comply with the EU directive that the budget deficit must not exceed 3 percent of GDP, the country abandoned the uniform tax in 2013.
Agriculture
In Slovakia, wheat, sugar beet and maize as well as oilseeds are grown mainly rapeseed and sunflower. Animal production is specialized in dairy products, pork, chicken meat and beef. Agriculture, together with fishing and forestry, employs about 3 percent of the labor force and accounts for an equal share of GDP.
About 2/5 of the land area is used for agriculture. The land can be divided into four agricultural zones. In a southern zone, corn and grapes are grown. To the north there are two zones with cooler climates, where wheat, rye and sugar beet are the most important crops. The northernmost zone, in the central and mountainous parts of the country, is dominated by livestock management. Prior to 1989, unprofitable agriculture was subsidized, but today it suffers from missing contributions, necessary for investment, and production has fallen.
Raw material resources and energy supply
In Slovakia, there are no significant deposits of minerals or mineral fuels. The production of crushing gravel, natural gravel and cement dominates the industrial mineral. Raw steel is the metal produced in the largest amount, followed by aluminum.
Slovakia has gone from being a net exporter to being a net importer of electricity since two nuclear reactors were closed after EU accession in 2004. 54 percent of the country’s electricity generation is covered by nuclear energy (2009), but this contribution will increase as additional reactors are put into operation (probably by 2015). Of the total energy supply, natural gas accounts for 1/4, and oil, coal and nuclear energy for each 1/5. About 7 percent of the energy supply is provided with renewable energy sources, mainly biofuels and hydropower plants (the latter, for example, on the river Váh and Hornád).
Industry
At independence in 1993, the country’s industrial sector was characterized by an oversized and energy-intensive heavy industry, including large steel mills in Košice and Bratislava. During the beginning of the 1990s, some restructuring took place, but the country still has a large automotive industry; about 30 percent of industrial production consists of cars. Several foreign car manufacturers have opened new factories in the country. The electronics industry has also expanded, however, the previously important chemical industry has decreased in importance.
Foreign trade
The country’s foreign trade has recently been directed mainly at other EU countries. The main single trading partner is Germany, which accounts for about 20 percent of the trade. The most important individual export product is vehicles. During the beginning of the 2000s, the country’s imports increased sharply, which was partly offset by increased foreign direct investment. The main import goods are machinery, mineral and gas. The latter is mainly imported from the Russian Federation.
- COUNTRYAAH: Find major trading partners of Slovakia, including major exports and major imports with latest trade value and market share as well as growth rate.
Tourism and gastronomy
The tourism industry is still under construction. In 2012, the country was visited by 6.2 million tourists. Primarily, visitors come from the Czech Republic, Germany and Poland. The most important tourist destinations are the ski resorts in Höga and Låga Tatra, which are also the starting points for hikes during the summer. The Tatra Mountains extend up to the Polish border and reach heights over 2,000 m. The capital Bratislava, located on the Carpathian slopes of the Danube, is also a popular tourist destination. The city has an old-fashioned city center around the huge castle castle. In the vicinity of Bratislava there are also several exciting destinations such as picturesque small towns, castles and health resorts.
Note: the capital city of Slovakia is Bratislava with a population of 422 900 (estimate 2016). Other major cities include Košice with a population of 239,200, Prešov with a population of 90,000, Žilina with a population of 81,000, Nitra with a population of 82,800, Banská Bystrica with a population of 78,700 (estimate 2016).
Slovak cuisine is heavy and robust, characterized by livestock management but also by the Hungarian cuisine’s refinement. Soups, charcuterie, potato in the form of knedliki (dumpling), roasted goose (pečená husa) and pork roast (veprova pečené) with sauerkraut are everyday foods. The devices are usually discreetly scented or significantly enriched with peppers. Halušky is a potato dumpling with grated cheese and fried pork which is happy to dry out the soups. Hungary is reminiscent not least in the form of plené papriky, stuffed young baked peppers, and in the fruit and nut-filled pancakes palačinky.
