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Analysts: Euro Gives Slovakia Competitive Edge Over Neighbours
Friday 15 January 2010 Zoom in | Print page
Bratislava, January 15 (TASR) - The euro is Slovakia's biggest competitive advantage over neighbouring countries, analysts asked by TASR have concurred.
The reason for this is a level of exchange-rate stability not found with other currencies. Significant exchange-rate fluctuations don't benefit the business environment.
"It's these very currency fluctuations in neighbouring countries that can be viewed as a symbol of instability. Such a negative might adversely influence an investor who is choosing a country to invest in," argued Postova Banka analyst Eva Sadovska. If Slovakia were still using its former currency, the koruna, the kind of strong rate that Slovakia saw at the end of 2008 before the changeover - 30.1260 SKK/EUR - would hardly be possible.
Sadovska admitted that countries with exports as the driving force behind economic growth and with a weakened currency may enjoy a certain advantage in exporting their products. Cheaper exports could represent a competitive edge during the global crisis. "On the other hand, this effect doesn't hold such significance specifically during a global crisis; so Slovakia shouldn't feel too sorry over the loss of the Slovak koruna," she added.
The single European currency is viewed as a competitive edge also by Slovenska sporitelna analyst Maria Valachyova. "Businessmen from the eurozone have no currency exchange costs when investing in another country with the euro as its currency, there's no exchange risk or related costs for preventive measures against this risk," she said.
Slovakia still needs to increase its level of attractiveness to investors, however. "Poor law enforceability is the biggest frailty of the Slovak business environment. Slovakia's tax system is more time-demanding than those of other OECD countries, with many businessmen also being plagued by a high tax burden," claimed Valachyova.
According to Marek Gabris from CSOB, it's important to maintain an attractive tax and contributions environment and to increase the flexibility of the labour market. The eastern regions of Slovakia are attractive thanks to their cheaper labour force and assets; but poorer accessibility due to inadequate infrastructure is a drawback.
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