Slovakia - SEI

Slovakia, as one of the youngest states participating in the Central European Initiative, from its establishment (1993) proceeds in a complex process of economic transition started still during Czechoslovakia. After the macro-economic success of the first years the deficiencies created by neglecting structural measures start to show in micro-economics.

At the time of the common state the economy was oriented mainly on energy and raw material intensive types of production (metallurgy, armament, energy, chemical industries).

Change in the structure of production and export, which was oriented on the needs of the COMECON market, was managed only gradually. In 1997 the share of industry on GDP decreased to 28.2%, building industry reached 5.3%, agriculture 4.8%, with the parallel increase in the growth of services to 61.7%.

Economic development in individual regions of Slovakia is very differentiated. This is evidenced mainly by unemployment rate in some of the districts in the East of Slovakia.

Economic development is promoted also by influx of foreign investments, the amount of which is not reaching the level which would correspond to the needs of economy, not even the level in the neighboring countries. The volume of direct foreign investments is growing, but the dynamics of this growth, compared to the previous years, is declining. The industry structure where the direct foreign investments are directed is changing significantly. The major portion is directed into industry (49% for the first half of 1998), into production and distribution of electricity and gas (16.7%), and commerce (17.8%). From the territorial aspect recently there has been a change in the adverse development in allocation of direct foreign investments from the area of Bratislava and its vicinity (in 1997 it was 62.6% of investments), to Eastern Slovakia. For the first half of 1998 Prešov and Košice regions got 56.9% of the total volume of direct foreign investments in Slovakia, which compared to 1997 is an increase by 56%. The share of Bratislava and its vicinity decreased to 37.4%. The largest investor in Slovakia in the first half of 1998 was Germany (19.8%), before Austria (19.5%), and the UK (12.6%). Direct foreign investments for the period from 1991 to 1997 reached a total volume of approx. SK 52 bn.

As a result of politically unbalanced development for the past four years Slovakia, as a target country for investors, was downgraded into the speculation zone by the rating agencies.

After the changes following the Parliamentary elections in the fall of 1998 it is generally expected that there will be again an upgrade in the investment rating of Slovakia, which would also mean an increased influx of direct foreign investments.

Slovak Trade FORUM