Economic Development

(GDP, INFLATION, BALANCE OF PAYMENTS, UNEMPLOYMENT RATE)

"The Slovak Republic has experienced remarkable progress during the first four years of its independence, " declared a group of American experts in April 1997. The macro-economic results of Slovakia are comparable to the evolution of its neighboring countries and in numerous areas, Slovakia’s economic indicators present better figures than all the former Eastern bloc countries.

All information is from the 1997/1998 Business Annual of Central Europe and shows the economic evolution in the principal post-Communist countries.

GDP Growth (in %)

1995 to 1996

  • Slovakia 6.8 6.9
  • Czech Republic 5.9 4.1
  • Hungary 1.5 1.0
  • Poland 7.0 6.0
  • Slovenia 4.1 3.1
  • Estonia 4.3 4.0
 Inflation (in %)

1995 to 1996

  • Slovakia 9.9 5.5
  • Czech Republic 9.1 8.8
  • Hungary 28.2 23.6
  • Poland 27.8 19.9
  • Slovenia 12.6 9.7
  • Estonia 29.0 23.2
Balance of current operations
in the balance of Payments (by % of GDP)

1995 to 1996

  • Slovakia 2.3 -10.1
  • Czech Republic -2.7 - 8.2
  • Hungary -5.6 - 3.8
  • Poland 4.6 - 1.0
  • Slovenia -0.2 0.3
  • Estonia -4.6 -10.0
 Unemployment Rate (in %)

1995 to 1996

  • Slovakia 13.1 12.8
  • Czech Republic 2.9 3.5
  • Hungary 10.4 10.5
  • Poland 14.9 13.6
  • Slovenia 13.9 13.9
  • Estonia 5.1 5.6

Foreign Capital

In spite of the difficult competition from different countries struggling to attract foreign investors, it must be noted that numerous foreign companies have chosen to develop their business activities in Slovakia and that other companies are following their lead. A case in point is the German company Volkswagen (present on Slovakian territory since 1990) which successfully set up its factories (30,000 automobiles per year). Another example is the Korean company Samsung which set up a company with Calex of Zlat Moravc. Other examples are Whirlpool which manufactures its products in Poprad, a city in the Tatras region, French investors (Rhne Poulenc) at Chemlon Humenne as well as other well-known foreign companies such as Siemens, Philips, Henkel and Bull who have chosen, and rightfully so, the economic region of Slovakia. Foreign capital has also been invested in the banking sector. The following foreign banks are present in Slovakia:

Name Headquarters Capital Start-up Date

CONCLUSIONS

Based on these facts, it can be affirmed today that the catastrophic scenarios and forecasts of those who feared Slovakia’s economic independence were unjustified, notably for the following reasons:

1) Slovakia undertook the change in its economy and its property structures based on the scenarios initially agreed upon during the era of the Federation which were adapted to the conditions present in Slovakia. Obviously, all the federal principles did not always have a positive impact. Currently, however, privatized companies are responsible for about 80% of the GDP.

2) Even if the structure of the Slovakian economy, a country of 5.3 million inhabitants, is not at first glance very favorable, especially in the long-term (the country mostly produces intermediate goods), it has allowed Slovakian companies to obtain market shares worldwide by taking advantage of the economic recovery trends. Exports from Slovakia to European Union countries increased by 28% in 1995 and 1996. These exports represent about half of all Slovakian exports. Slovakia exports especially to Germany (25% of its total exports) and to the Czech Republic (25%), with Austria in third place with 7%.

3) The Slovakian population has proved its excellent ability to adapt to new market conditions, its sense of enterprise, its commercial talents, its management skills and its flexibility.

4) Social rest was able to be maintained, which allowed indispensable, but often unpopular, measures to be put in place.