Slovakia traces its roots to the 9th century state of Great Moravia. Subsequently, the Slovaks became part of the Hungarian Kingdom, where they remained for the next 1,000 years. Following the formation of the dual Austro-Hungarian monarchy in 1867, language and education policies favoring the use of Hungarian (Magyarization) resulted in a strengthening of Slovak nationalism and a cultivation of cultural ties with the closely related Czechs, who were under Austrian rule. After the dissolution of the Austro-Hungarian Empire at the close of World War I, the Slovaks joined the Czechs to form Czechoslovakia. During the interwar period, Slovak nationalist leaders pushed for autonomy within Czechoslovakia, and in 1939 Slovakia became an independent state allied with Nazi Germany. Following World War II, Czechoslovakia was reconstituted and came under communist rule within Soviet-dominated Eastern Europe. In 1968, an invasion by Warsaw Pact troops ended the efforts of the country's leaders to liberalize communist rule and create "socialism with a human face," ushering in a period of repression known as "normalization." The peaceful "Velvet Revolution" swept the Communist Party from power at the end of 1989 and inaugurated a return to democratic rule and a market economy. On 1 January 1993, the country underwent a nonviolent "velvet divorce" into its two national components, Slovakia and the Czech Republic. Slovakia joined both NATO and the EU in the spring of 2004 and the euro zone on 1 January 2009.
Central Europe, south of Poland
lignite, small amounts of iron ore, copper and manganese ore; salt; arable land
Population - distribution
a fairly even distribution throughout most of the country; slightly larger concentration in the west in proximity to the Czech border
Slovak (official) 78.6%, Hungarian 9.4%, Roma 2.3%, Ruthenian 1%, other or unspecified 8.8% (2011 est.)
BRATISLAVA (capital) 401,000 (2015)
- Conventional long form
- Slovak Republic
- Conventional short form
- Local long form
- Slovenska republika
- Local short form
- Geographic coordinates
- 48 09 N, 17 07 E
- Time difference
- UTC+1 (6 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in March; ends last Sunday in October
accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction
Slovakia’s economy suffered from a slow start in the first years after its separation from the Czech Republic in 1993, due to the country’s authoritarian leadership and high levels of corruption, but economic reforms implemented after 1998 have placed Slovakia on a path of strong growth. With a population of 5.4 million, the Slovak Republic has a small, open economy driven mainly by automobile and electronics exports, which account for more than 80% of GDP. Slovakia joined the EU in 2004 and the euro zone in 2009. The country’s banking sector is sound and predominantly foreign owned.
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -640,769,433
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 80,670,336,523
- Exports of goods and services
- US$ 84,012,717,705
- Total Merchandise Trade
- FDI, net inflows
- US$ 3,548,472,664
- Commercial Service Exports
- US$ 8,383,703,184
grains, potatoes, sugar beets, hops, fruit; pigs, cattle, poultry; forest products
automobiles; metal and metal products; electricity, gas, coke, oil, nuclear fuel; chemicals, synthetic fibers, wood and paper products; machinery; earthenware and ceramics; textiles; electrical and optical apparatus; rubber products; food and beverages; pharmaceutical
- vehicles and related parts 27%, machinery and electrical equipment 20%, nuclear reactors and furnaces 12%, iron and steel 4%, mineral oils and fuels 5% (2015 est.)
- Germany 22.7%, Czech Republic 12.5%, Poland 8.5%, Austria 5.7%, Hungary 5.7%, France 5.6%, UK 5.5%, Italy 4.5% (2015)
- machinery and electrical equipment 20%, vehicles and related parts 14%, nuclear reactors and furnaces 12%, fuel and mineral oils 9% (2015 est.)
- Germany 19.4%, Czech Republic 17.4%, Austria 9.1%, Hungary 6.3%, Poland 6.3%, South Korea 5.5%, Russia 5.2%, China 4.1% (2015)
- Country Risk Rating
- Changes in generally good but somewhat volatile political and economic environment can affect corporate payment behavior. A basically secure business environment can nonetheless give rise to occasional difficulties for companies. Corporate default probability is quite acceptable on average.
- Business Climate Rating
- The business environment is relatively good. Although not always available, corporate financial information is usually reliable. Debt collection and the institutional framework may have some shortcomings. Intercompany transactions may run into occasional difficulties in the otherwise secure environments rated A3.
- Membership of the Eurozone
- Production platform for the European automotive and electronics industry
- Satisfactory public and external accounts
- Robust financial system dominated by foreign groups
- Small economy dependent on European investments and markets
- Heavy concentration of exports on certain sectors: automotive and consumer electronics
- Dependence on Russia for 69% of its energy (gas, oil, uranium)
- Regional development inequalities / the center and the east lagging behind
- Lack of research and development
- High long-term unemployment and lack of skilled workforce
Growth is expected to remain strong in 2017. The main driver will continue to be sustained household consumption. Households are expected to benefit from continuing job growth and falling unemployment. Pay levels will be driven by the growing shortage of skilled labour in the automotive and IT sectors in the east and centre of the country. The higher participation rates for women, the long-term unemployed and migrants do not compensate for this shortage. Accordingly, manufacturers are seeking to attract available labour from the east of the country, but with little success because of low mobility. Inflation will make a limited re-appearance, especially as government-controlled prices for gas and electricity will drop further. After stagnating in 2016, investment is expected to pick up. Private investment will continue to be driven by FDIs in automotive and energy, specifically by the construction of a Jaguar Land Rover plant in the west of the country and the extension of the PSA and VW plants. House building will retain its dynamism. After falling sharply because of the gap between two European financing programmes, public investment is expected to recover, with, in particular, the Bratislava Ring Road and the modernisation of road and railway infrastructures. Although exports, specifically those relating to automotive, and tourism, will retain their dynamism, trade will make only a very weak contribution to growth. The reason for this lies in the very high import content of FDIs. It will take until 2018 for their contribution to increase, once production capacity has improved.
The public deficit is expected to continue falling steadily and will remain moderate. The effort will be modest and will mainly depend on increasing revenues. First and foremost, these will benefit from growth. Revenues are also expected to benefit from the introduction of a 7% tax on dividends and a levy of 8% on non-life insurance premiums, an increase in excise duties on tobacco and the doubling of the specific extra tax on large companies in the energy and telecommunications sectors. The special 0.2% tax on the banks will be maintained against all expectations. Finally, the ceiling for the calculation of social security contributions is likely to be removed. Against this, tax on profits will be cut from 22% to 21%. As for spending, this is expected to rise more slowly, despite the recovery in public investment and a further significant increase in teachers' salaries. In this context, the burden of public debt will remain considerable but below the target threshold under the Stability and Growth Pact (60% of GDP). This notwithstanding, in accordance with the debt-brake included in the constitution, the fact that it is above 52% imposes constraints on spending. The debt is denominated in euros and so is not vulnerable to exchange rate risk. The health of the banking sector, which is dominated by Austrian and Italian groups, whose resources consist of local deposits, helps to keep borrowing costs down.
The current account balance is likely to continue to run a small deficit. Despite the increase in imports resulting from buoyant domestic demand, dynamic sales of cars and car parts, electronic, IT and electrical equipment, as well as household appliances, strong tourism and road transport activity, will maintain the surplus on trade in goods and services. Only half of the amount in interest and dividend repatriation resulting from the strong presence of foreign investors, particularly in automotive industry, is likely to be offset by remittances from Slovakian émigrés. The level of external debt is high. At the end of June 2016, it accounted for 87% of GDP, of which half was held by the State and the Central Bank, 20% by non-financial companies and 15% both by banks and in connection with FDIs.
Robert Fico has led the government since 2012. However, after the March 2016 elections, he and his centre-left party, the SMER-SD (European Socialist Party Member) lost their absolute majority in Parliament and had to form an alliance with the (conservative) National Party and the (centre-right) Most (Bridge) Party. However, the policy of the centre-left, namely slow fiscal consolidation based on higher taxes on higher incomes and the regulated sectors, has been maintained. While the popular support enjoyed by the SMER has fallen (28% of votes cast in 2016 compared with 44% in 2012), the other parties (seven parties sitting in parliament as well as the SMER) do not seem able to provide an alternative, at lease in the short term. The uncertainty arises from the consequences of a potential resignation of the prime minister. Corruption (e.g. in the award of public contracts) and the wide inequalities between the regions are the country's major challenges, as they are among the most marked in the Euro zone. However, overall, the business climate remains satisfactory.