Slovakia economy

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Slovakia
Flag of Slovakia.svg
World economic rank 62nd (nominal) (2018)
currency Euro (EUR)
Trade
organizations 		EU , WTO , OECD
Key figures
Gross domestic
product (GDP) 		$ 106.57 billion (nominal) (2018)
$ 191.25 billion (PPP) (2018)
GDP per capita $ 19,579 (nominal) (2018)
$ 35,136 (PPP) (2018)
GDP by economic sector Agriculture : 3.4% (2017)
Industry : 34.9% (2017)
Services : 61.7% (2017)
growth   4.0% (2018)
inflation rate 2.5% (2017)
Employed 2.42 million (2018)
Employed persons by economic sector Agriculture : 3.6% (2009)
Industry : 38% (2009)
Services : 56.6% (2009)
Unemployment rate 6.6% (2018)
Foreign trade
export € 39.72 billion (2009)
Export goods (Transport) machines, metal goods
Export partner Germany : 19.3% (2009)
Czech Republic : 13.6% (2009)
France : 7.4% (2009)
import € 38.53 billion (2009)
Import goods Machines, mineral products
Import partner Germany : 15.6% (2009)
Czech Republic : 10.3% (2009)
Russia : 9.7 (2009)
Foreign trade balance € 1.2 billion (2009)
public finances
Public debt 51.6% of GDP (2017)
Government revenue 39.4% of GDP (2017)
Government spending 40.4% of GDP (2017)
Budget balance 1.0 of GDP (2017)
Slovak National Bank

This article deals with the situation and development of the Slovak economy since 1990.

Current situation

introduction

The privatization of the economy that began in 1990 was largely completed by 2006; only a few strategic companies are still in state hands (e.g. railways). The transformation to a market economy can also be regarded as complete 20 years after the fall of socialism. Macroeconomic stability has long been achieved, structural reforms are well advanced, the banking sector is almost entirely in foreign hands, and foreign investment ushered in a boom before the onset of the crisis. In 2010 economic growth is expected to be one of the highest in Central Europe again, but the nominal wage level is still comparatively low. The economy is strongly export-oriented . Due to the strong focus of Slovakia on automotive engineering and its suppliers, certain cluster risks are to be expected as a result of the restructuring of the automotive industry .

The current economic data of Slovakia are:

  • annual economic growth 2011: 3.3%; 2018: 4.1%
  • Unemployment in 2011: 13.4% according to eurostat; 2019: 5.8% according to de.statista, com
  • Average wage in 2010: 803 euros; 2017: $ 24,328 annually
  • Annual inflation 2011: 3.6%; 2019: 2.7%
  • Compared with the GDP of the EU -Durchschnitts expressed in purchasing power standards Slovakia reached an index of 74.0 (EU-27: 100) (2010).

In the Global Competitiveness Index , which measures a country's competitiveness, Slovakia ranks 59th out of 137 countries (2017-2018). In 2017, the country ranks 57th out of 180 countries in the index for economic freedom .

Tax reform and investors

Since 2004 applies Slovak tax law a so-called flat tax ( flat tax ): It is in Slovakia a single tax rate for the income tax , corporation tax , VAT and other taxes, namely 19%. A reduced sales tax rate of 10% for books and medication was subsequently introduced. Combined with the fact that the Slovak wage level ( expressed in euros , but not in terms of purchasing power ) is at a low level in Central Europe, as well as the favorable location of the country and the fact that it is part of the euro area, the country has a locational advantage and attracted massive amounts of foreign direct investment (Peugeot, Kia, Samsung, Getrag Ford, etc.) until the outbreak of the economic crisis.

According to a survey carried out by the German-Slovak Chamber of Commerce and Industry in March 2010, 92% of local German entrepreneurs would choose Slovakia again as an investment location today. In comparison with the Central and Eastern European countries as well as Germany and China, the Slovak Republic comes off as the most attractive location. With a score of 2.19, it is well ahead of the Czech Republic (2.47), Poland (2.67), Slovenia (2.70) and Hungary (3.39). The IMF and the OECD also declared the end of 2004 Slovakia for the "reform-" of its member countries.

GDP

According to the IMF , the gross domestic product per capita ( purchasing power parity ) in Slovakia was USD 21,245 in 2009 , making it 40th in the world rankings.

In absolute figures, the gross domestic product ( in absolute terms without taking purchasing power into account) is around 63.3 billion euros (2009). In absolute figures, this results in EUR 11,722 per capita GDP.

The GDP of 1989, i.e. the last year before the start of the transformation, was reached again in 1997. Slovakia was the second Eastern European country after Poland to reach this imaginary border.

Real GDP growth in 2007 reached 10.6%. In 2008 a growth of 6.2% could be achieved. In the following year, 2009, the Slovak economy shrank by 4.7% due to the global economic crisis. For 2010, Eurostat expects real growth of 2.7%.

Nominal GDP development from 2000 to 2009 in SKK, USD and EUR
Key figure / year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
GDP in SKK mil. 937.964 1,018,430 1,108,117 1,222,483 1,361,683 1,485,301 1,659,573 1,851,787 2,102,755 1,906,976
GDP per capita in SKK 173,700 189,300 206,000 227,300 253,000 275,700 307,800 343.100 389,400 353.100
SKK / USD exchange rate 46.2 48,347 45.335 36.773 32.255 31,022 29.724 24.713 - -
GDP in USD bn 20.3 21.1 24.4 33.2 42.2 47.9 55.8 74.9 - -
GDP per capita in USD 3,800 3,900 4,500 6,200 7,800 8,900 10,400 13,900 - -
SKK / EUR exchange rate 42,589 43,309 42.699 41.491 40.045 38,593 37.248 33.781 31.291 30.126
GDP in EUR bn - - - - 45.1 49.3 55.0 61.5 67.2 63.3
GDP per capita in EUR - - - - 8,352 9.130 10.158 11,389 12,444 11,722

Three sectors

Shares of the three sectors in GDP (2007):

  • Agriculture and forestry 4%
  • Industry 27%
  • Services 69%

In recent years there has been a significant increase in the share of services.

The workforce was distributed across these sectors as follows (2002):

  • Agriculture 6.2%
  • Industry 38.4%
  • Services 55.4%

unemployment

Unemployment rose in the course of the radical reforms of the Dzurinda government from 14.9% at the end of 1998 to 19.2% at the end of 2001 (seasonally adjusted harmonized unemployment), but then fell again to 16.6% at the end of 2003. 2004 is unemployment rose again to 16.9%.

After Slovakia joined the EU in 2004, the unemployment rate fell to 9.5% in 2008. In the wake of the global economic crisis, however, it rose again to 12.1% in 2009.

inflation

After inflation in 2004 was still relatively high across Europe at 7.5% as measured by the Consumer Price Index , it was able to be reduced further in the following years. In 2007 it only reached 1.9%, in the year the euro was introduced in 2009, which was also characterized by the global economic crisis, there was an extremely low inflation rate of only 0.9%.

Budget deficit

The budget deficit is currently (2009) around 6.5% of GDP due to the global economic crisis. The pre-crisis level was around 2 to 3% of GDP in each case, so that the Maastricht criteria were met in 2008 and it was possible to introduce the euro. For 2010, the government expects a deficit of around 7% of GDP. A decline can only be expected from 2011 onwards.

West-East divide

The biggest problem in Slovakia remains a huge economic gap (which has actually existed for a good 200 years) between the poor east of the country and the more modern west of the country, which attracts foreign investment, in which even the greater Bratislava area has around 108% of average GDP EU represents the second richest region of the (former and future) acceding countries of Central and Eastern Europe. However, since wages are also significantly lower in the east than in the west, foreign investors have recently been particularly interested in the east, which should ease the gap over time.

Currency and introduction of the euro

In Slovakia, payments have been made in the euro since January 1, 2009 , which replaced the Slovak crown at an exchange rate of 30.126 SKK / EUR.

On May 7, 2008, the European Commission recommended the introduction of the euro in Slovakia on January 1, 2009 based on the ECB's convergence report. The country (as the only one of the 9 countries assessed in the convergence report) met all Maastricht criteria. On 19./20. At the summit of the heads of state on June 6th, the EU countries also approved the introduction of the euro, so that the introduction could go ahead as planned.

Foreign trade

To be imported (2008): Electronics 13.8; Motor vehicles and parts 13.1; Fuels, mineral oils 12.6; Machines 9.6; chem. Products 8.7; Electrical engineering 6.1; Iron, steel 4.8; Food 4.5; Metal goods 4.2; Raw materials 2.9; Other 19.7.

The following are exported (2008): motor vehicles and parts 21.7; Electronics 17.0; Machines 8.5; Iron and steel 7.7; Electrical engineering 5.8; Fuels, mineral oils 5.1; chemical products 4.8; Metal goods 3.7; Food 3.1; Others 22.6.

The most important importing countries are (2008): 19.7% Germany, 13.3% Czech Republic, 10.8% Russia, 5.8% Rep. Korea, 5.7% PR China, 5.0% Hungary, 4.0 % France, 3.9% Poland, 3.7% Italy.

The most important export countries are (2008): 20.2% Germany, 13.0% Czech Republic, 6.8% France, 6.6% Poland, 6.2% Hungary, 5.9% Italy, 5.7% Austria, Russia 3.8%.

Slovakia is a member of the International Cocoa Organization .

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history

Initial stage of transformation

After the fall of communism and the associated planned economy (end of 1989) - as in all former Eastern Bloc countries - followed an initial transition phase (in Slovakia 1990–1993) in which GDP fell significantly. Until then, foreign trade was largely restricted to the countries of the former Comecon . After the markets in the east had partially collapsed, there were consequent problems in the markets of the individual Eastern bloc states, including Czechoslovakia.

In Slovakia, the general temporary decline in GDP was also fueled by two factors. Primarily because the armaments industry and other heavy industries (the latter for Comecon) were concentrated in the territory of Slovakia within the framework of Czechoslovakia , which lost their sales markets due to the new conditions in Europe. Secondly, also because Czechoslovakia was dissolved in 1993, which postponed the upswing that was already noticeable in 1992 by a year. However, since trade continued with the Czech Republic, the direct economic impact of the division should not be overestimated.

The economic transformation, i.e. the transition from a planned economy to a free market economy , also required a release of the previously state-regulated prices as part of the liberalization of the economy. In Slovakia, this mainly happened on January 1, 1991 and, as expected, led to a drastically increased inflation of 61.2% in 1991 (before inflation was almost 0%). For prices, however, it should be noted that, in contrast to countries like Poland, Russia or Hungary, inflation in Slovakia, as well as in the Czech Republic, has never been a real problem with the exception of this one year.

A liberalization of foreign trade was also necessary: ​​exports and imports were made a lot easier, above all by the abolition of the former quantity restrictions for the possession of foreign currency.

A major challenge for the government was also rapid privatization, which includes the sub-areas of restitution, i.e. the return of goods to old owners, as well as the actual privatization of state-owned companies. In Czechoslovakia, the actual privatization decided on coupon privatization by means of coupon distributions, but this was discontinued under the last Mečiar government (1994-1998) in 1995 and continued through direct sales. In retrospect, this change is rated rather positively.

On the labor market , there was a drastic increase in the unemployment rate from 1.5% in 1990 to 11.8% in the following year in the early 1990s , as many companies, especially in the arms industry, had to close for the reasons mentioned above. During the government phase under Mečiar, the unemployment rate was still slightly lower than under the following Dzurinda government (see below).

Development since 1993

Since the end of 1993 / beginning of 1994 (now independent) Slovakia has continuously recorded relatively high economic growth, which (with the exception of one year) was even higher than the economic growth of the Czech Republic every year . Around 1997–1998, ie towards the end of the term of office of the last Mečiar government , economic growth was also boosted by significant government investments in the construction sector. Although these significantly increased the country's debt, the country's debt level was still the second lowest in Central and Eastern Europe in 1998 (below 60% of GDP).

The Meciar governments have always tried (partly because of strategic considerations, partly because of selfish political calculations) to ensure that the country's strategically important large companies remain in the hands of Slovak physical and natural persons.

At the end of 1998, the first Dzurinda government came to power, which, as it were, made a turn of 180 degrees. Sooner or later, all companies were released for privatization by foreign companies, the construction of the motorway and other large-scale projects were almost completely stopped immediately and many companies that had "vegetated" to date were allowed to go bankrupt . The result was a massive rise in unemployment (around 6 percentage points ) - which has since (2004) "settled down" somewhat - a temporary significant decline in economic growth, initially also a stagnation of real wages and an expansion of the West-East -Globe (see above), as there are practically no motorways in the east to this day.

However, the confidence of foreign investors was restored. In addition, the first (1998–2002) and second (from 2002) Dzurinda government carried out various price deregulations, tax reforms and other rapid reforms. In a later phase, new industrial parks were also created and worthwhile projects such as the settlement of car manufacturers were funded from state funds. The state subsidies are sometimes viewed as excessive. The most important innovation, which significantly improved the country's image in business circles, was the introduction of a so-called flat tax on January 1, 2004 (see above).

See also

Web links

Individual evidence

  1. ↑ a b c d e World Economic Outlook Database IMF - World Economic Outlook Database.Retrieved April 13, 2020
  2. ↑ a b c Basic Statistics of Slovak Republic, 2017. OECD, accessed on April 13, 2020 (English).
  3. ↑ Slovakia economic growth. In: theglobaleconomy.com. The Global Economy, accessed April 13, 2020 .
  4. ↑ Slovstat - Sectoral Employment Structure Accessed 16 October 2010
  5. ↑ a b c Slovstat - Foreign Trade by Months. Retrieved October 16, 2010.
  6. ↑ a b Slovstat - Total Foreign Trade by Sections Accessed on October 16 of 2010.
  7. ↑ a b Slovstat - Foreign Trade by Country Accessed on October 16 of 2010.
  8. ↑ Eurostat - Public debt. Accessed 16 October 2010.
  9. ↑ Eurostat - Government Revenue.Retrieved April 16, 2011.
  10. ↑ Eurostat - total expenditure. Accessed April 16, 2011.
  11. ↑ Eurostat - Government deficit.Retrieved October 16, 2010.
  12. ↑ epp.eurostat.ec.europa.eu
  13. ↑ At a Glance: Global Competitiveness Index 2017–2018 Rankings . In: Global Competitiveness Index 2017-2018 . ( weforum.org [accessed December 27, 2017]).
  14. ↑ heritage.org
  15. ^ Statistical Office of Slovakia
  16. ↑ a b c epp.eurostat.ec.europa.eu
  17. ^ Martin Votruba: Regional Wealth . In: Slovak Studies Program . University of Pittsburgh. Retrieved April 10, 2010.
  18. ^ Martin Votruba: Relative Wealth . In: Slovak Studies Program . University of Pittsburgh. Retrieved April 10, 2010.