Economy of Slovakia
Economy of Slovakia
The Slovak economy is considered an advanced economy, with the country dubbed the "Tatra Tiger". Slovakia transformed from a centrally planned economy to a market-driven economy. Major privatizations are nearly complete, the banking sector is almost completely in private hands, and foreign investment has risen.
Slovakia has recently been characterized by sustained high economic growth. In 2006, Slovakia achieved the highest growth of GDP (8.9%) among the members of the OECD. The annual GDP growth in 2007 is estimated at 10.4% with a record level of 14.3% reached in the fourth quarter. According to Eurostat data, Slovak PPS GDP per capita stood at 72 percent of the EU average in 2008.
Unemployment, peaking at 19.2% at the end of 1999, decreased to 7.51% in October 2008 according to the Statistical Office of the Slovak Republic. In addition to economic growth, migration of workers to other EU countries also contributed to this reduction. According to Eurostat, which uses a calculation method different from that of the Statistical Office of the Slovak Republic, the unemployment rate is still the second highest after Spain in the EU-15 group, at 9.9%.
Inflation dropped from an average annual rate of 12.0% in 2000 to just 3.3% in 2002, the election year, but it rose again in 2003–2004 because of rising labor costs and excess taxes. It reached 3.7 % in 2005.
Slovakia adopted the euro currency on 1 January 2009 as the 16th member of the Eurozone. The euro in Slovakia was approved by the European commission on 7 May 2008. The Slovenská koruna was revalued on 28 May 2008 to 30.126 for 1 euro, which was also the exchange rate for the euro.
Slovakia is an attractive country for foreign investors mainly because of its low wages, low tax rates and well educated labour force. In recent years, Slovakia has been pursuing a policy of encouraging foreign investment. FDI inflow grew more than 600% from 2000 and cumulatively reached an all-time high of $17.3 billion USD in 2006, or around $22,000 per capita by the end of 2008.
Despite a sufficient number of researchers and a decent secondary educational system, Slovakia, along with other post-communist countries, still faces major challenges in the field of the knowledge economy. The business and public research and development expenditures are well below the EU average. The Programme for International Student Assessment, coordinated by the OECD, currently ranks Slovak secondary education the 30th in the world (placing it just below the United States and just above Spain).
In March 2008, the Ministry of Finance announced that Slovakia's economy is developed enough to stop being an aid receiver from the World Bank. Slovakia became an aid provider at the end of 2008.
Although Slovakia's GDP comes mainly from the tertiary (services) sector, the country's industry also plays an important role within its economy. The main industry sectors are car manufacturing and electrical engineering. Since 2007, Slovakia has been the world's largest producer of cars per capita, with a total of 571,071 cars manufactured in the country in 2007 alone. There are currently three automobile assembly plants: Volkswagen's in Bratislava, PSA Peugeot Citroen's in Trnava and Kia Motors' Žilina Plant.
From electrical engineering companies, Sony has a factory at Nitra for LCD TV manufacturing, Samsung at Galanta for computer monitors and television sets manufacturing.
Bratislava's geographical position in Central Europe has long made Bratislava a crossroads for international trade traffic. Various ancient trade routes, such as the Amber Road and the Danube waterway have crossed territory of today Bratislava. Today Bratislava is the road, railway, waterway and airway hub.