This article is concerned with the situation and development of the economy of the Slowakei in the last 15 years.

Current situation

Introduction

Approximately in the year 2003 the privatisation of the national economy lasting since 1990 was final. Also the transformation to the free-market economy can be regarded 14 years after the case of communism and nearly one year after the European Union entry as finally. Macro-economic was reached, structural reforms far progressed, the banking is nearly completely in foreign hands and foreign investments increases. The economic growth is at present the highest in Central Europe, the nominal wage level however the smallest in Central Europe. The economy is strongly export-oriented. Despite all these positive facts the Slowakei has still large unemployment.

The current economic parameterses of the Slowakei are:

• annual economic growth dec. 2004:5,5 %
• Unemployment March 2005: 17.5% as per Slowaki office for statistics (sample) and/or 12.7% as per labour office ("“unemployment"” evidierte)
• Average wage (1. Quarter 2005): 16022 SKK = about 411 EUR (material increase in the comparison between years: 7.2%)
• Rate of exchange: 1 SKK = about 1/39 EUR, tendency: Revaluation of the SKK
• Yearly inflation dec. 2004:5,9%

Tax revision and investor

The most important innovation is since 1 January 2004 the introduction of a Flat in such a way specified Tax: There is 19% to the Slowakei now only one control item for the income taxes, corporation tax, value added tax and other taxes, i.e. That means among other things that one pays in each case 19%, independent of whether one is a millionaire or a poor student. Combined with the fact that the slowakische wage level (expressed in euro, not however from the purchasing power) is clearly the lowest in Central Europe, as well as with the favorable situation of the country, the country has now a clear location advantage and pulls massive new foreign direct investors on (Peugeot, Hyundai, Samsung, Ford etc.).

In an inquiry of the German Chamber of Commerce in March 2004 50% of the German entrepreneurs selected the Slowakei as at present best investment location. The IWF as well as the OECD explained besides end of 2004 the Slowakei for the "“reform-most joyful"” of their member countries.

GROS DOMESTIC PRODUCT

After a list of the IWF the pro head gros domestic product amounted to the Slowakei in June 2004 14,059, 707 USD and took thereby to the 43. Place in the world rank list.

In absolute numbers the gross domestic product (is called absolute without consideration of the purchasing power) amounts to converted 21 billion euro (2003). From it 3,878 euro pro head gros domestic product result in absolute numbers. In Germany one compiles per head zirka 7 times as much.

The GROS DOMESTIC PRODUCT of the yearly 1989, the last yearly before beginning of transformation, was thus reached 1997 again. The Slowakei was thereby the second country of Eastern Europe to Poland, which achieved this imaginary border.

Gros domestic product growth reached 2002 particularly owing to domestic demand 4.6%. In the year 2003 however above all the exports increased rapidly help to an economic growth of 4,5%, although the demand of the households sank. In the year 2004 the expected economic growth from 5,5% might have to be attributed to a certain part to the European Union entry. In the following years further such high numbers are expected, since should begin new foreign investment to show their effect.

Three sectors

Portions of the three sectors of the GROS DOMESTIC PRODUCT (2002):

• Agriculture 4%
• Industry 29%
• Services 67%

In the last years a clear increase of the portion of the services was to be registered.

Regarding the portions of the employed persons the numbers behaved as follows:

• Agriculture 6,2%
• Industry 38,4%
• Services 55,4%

Unemployment

Unemployment rose in the course of the radical reforms of the Dzurinda government of 14,9% at the end of of 1998 to 19,2% at the end of on of 2001 (harmonized unemployment season-settled), sank then however 16.6% at the end of the yearly 2003. 2004 unemployment again easily rose.

Inflation

The inflation sank from an average annual rate of 12% in the year 2000 on only 3.3% in the election year 2002, it increased however 2003-2004 due to the execution of necessary steering wheels and price increases on the part of the government again. 2004 amounted to it about 7.5%, since there are however no prices and taxes, which would be to be still deregulieren, is starting from 2005 a clearly smaller inflation to expect (less than half).

Budget deficit

The budget deficit moves at present easily over 3% GROS DOMESTIC PRODUCT. At the latest starting from 2008 it is to be below 3%, in order to make the introduction possible of the euro 2009. According to the Maastricht criteria the budget deficit may not exceed 3%.

There would not be however the extensive slowakische pension reform, which will long exeptionally load the slowakische state budget in the start-up phase starting from 2005 a few years, the 3% already 2007 would be fulfilled.

The slowakische government plans to reduce their budget deficit 2006 to 2,9 per cent. That is to be made possible by an extensive privatisation program, whose proceeds are to amount to after expectations of the government 40 billion crowns.

West east downward gradient

The largest problem of the Slowakei remains an enormous (actually already since well 200 years existing) economic downward gradients between the poor east of the country and more modern and foreign investments the attracting west of the country, in which even the region Bratislava represents the secondaryrichest region (former and future) of the entry countries of central and Eastern Europe with approximately 108% of the average gros domestic product of the European Union. Since however in the east also the wages are clearly smaller than in the west, foreign investors are interested recently particularly in the east, which should moderate the downward gradient with the time something.

Currency and euro introduction

In the Slowakei still pays one with the 1993 introduced slowakischen crown. If nothing unforeseeable happens, the euro is introduced to the Slowakei on the 1. 1. 2009.

38-39 Slowaki crowns correspond at present to a euro. The value of the slowakischen currency constantly rises, i.e. up to the introduction of the euro roughly only 34-38 Slowaki crowns might correspond to a euro.

External trade

Are imported (2003): 15.0% means of transport, 14.2% machines, 13.1% mineral products, 12.2% electrical equipment, 9.0% unedle metals, 7.7% chemical products

Are exported: 29.0% means of transport, 13.5% unedle metals, 9.8% machines, 9.0% electrical equipment, 6.0% mineral products, 5.2% plastic, india rubber, 5.1% textiles, 3.8% paper, 3.4% chemical products

The most important importing country are: 25.5% Germany, 14.3% Tschechien, 10.7% Russia, 6.2% Italy, 4.4% Austria, 4.2% France, 3.5% Poland, 3.4% Hungary

The most important export countries are: 30.8% Germany, 12.9% Czech rep., 7.5% Italy, 7.4% Austria, 5.3% the USA, 4.9% Hungary, 4.8% Poland, 3.5% France

Public expenditures

Between 1992 and 2000 lay the portion of the public expenditures for

• the health service with 19%
• the training system with 11%
• the military with 5%

Articles in category "Economics of the Slowakei"

We found here 15 articles.