Economy
GDP (2003 est.): $32.5 billion.
GDP growth rate (2003 est.): 3.9%.
Nominal per capita income (2003 est.): $5,234.
Unemployment (Sept. 2003): 13.9%.
Natural resources: Antimony, mercury, iron, copper, lead, zinc, magnesite, limestone, lignite.
Agriculture: Products--milk, eggs, poultry, cattle, hogs, potatoes, oils, grains, vegetables.
Industry: Types--iron and steel, chemicals, automobiles, light industry, food processing, engineering, building materials.
Trade (2003 Jan.-Sept.): Exports--$14.1 billion: vehicles, iron and steel, machinery and energy equipment, plastics, fiber optics.
Imports--$14.3 billion: mineral fuels and oils, machinery, audio/video equipment, vehicles. Partners--Germany, Czech Republic, Austria, Russia, Hungary, Italy, Poland.
Foreign investment (1989-2003 est.): Cumulative $10 billion. Sources of direct foreign investment--Germany 24%; Netherlands 16%; Austria 14%; Italy 9%, United States 4%.** Sectors of direct foreign investment (through June 2003)--industry 37.3%; banking and insurance 23.4%; transportation and telecommunications 10.6%; wholesale and retail trade 11.3%; production of electricity, gas and water 12.1%.
*Figures are based on immediate city's (not region) Permanent Resident Population.
**Government of Slovakia official statistic. A recent U.S. Embassy survey found that, taking into account investments of U.S. subsidiaries in Europe, U.S. investment is more than 15% of the total.
Economy of Slovakia
Since the establishment of the Slovak Republic in January 1993, Slovakia has continued the difficult transformation from a centrally planned economy to a modern market-oriented economy. This reform slowed in the 1994-98 period due to the crony capitalism and irresponsible fiscal policies of Prime Minister Vladimir Meciar's government. While economic growth and other fundamentals improved steadily during Meciar's term, public and private debt and trade deficits soared, and privatization, often tarnished by corrupt insider deals, progressed only in fits and starts. Real annual GDP growth peaked at 6.5% in 1995 but declined to 1.3% in 1999. Much of the growth in the Meciar era, however, was attributable to high government spending and over-borrowing rather than productive economic activity. For all of 2002, real GDP rose 4.4%.
Economic growth is expected to accelerate to 3.9% in 2003 and over 4% in 2004. Headline consumer price inflation dropped from 26% in 1993 to an average rate of 3.3% in 2002, but rose again to an estimated 8.5% in 2003, driven by liberalization of subsidized prices of utilities. The inflation trend in 2002 was largely affected by the government's reluctance to continue its multi-year program of price deregulation due to election year pressures. Then in 2003, the government reduced subsidies by a larger than normal amount to offset its inaction in 2002. This trend will likely reverse itself by 2005, with inflation dropping to approximately 5%.
After economic stabilization in 1999 and 2000, Slovakia's current account balance recorded a deficit of 8.2% of GDP in 2002, the second largest number in the country's history (2001 was 8.8%), compared with 3.7% in 2000. However, for the first 10 months of 2003, the country's trade deficit has dropped by more than 80% compared to 2002, and it has recorded several monthly trade surpluses for the first time in years. Slovakia had a $2.1 million trade deficit in 2001, and gross foreign debt was about $13.2 billion at the end of 2002, roughly 53% of GDP. Foreign direct investment (FDI) in Slovakia has increased dramatically. The Dzurinda government has opened doors for foreign investors and introduced competitive incentives schemes, including a flat income tax for corporations and individuals. Cumulative FDI has quintupled since the beginning of 2000, and was boosted by large privatization receipts. As of 2002, Slovakia has enjoyed per capita FDI of approximately $1,800.
Germany is Slovakia's largest trading partner, purchasing almost 31% of Slovakia's exports and supplying 25% of its imports in the first nine months of 2003. Other major partners include the Czech Republic (14.4% imports; 13.1% exports), Italy (6.2%; 7.5%), Russia (11.2%; 1%), and Austria (4.4%; 7.2%). Slovakia imports nearly all of its oil and gas from Russia. The country's export markets are primarily Organization for Economic Cooperation and Development (OECD) and EU countries. In 2000, Slovakia received an invitation to join the OECD as its 30th member. More than 50% of its trade is with EU members. The United States accounts for about 4% of total trade with Slovakia. The Slovak Republic has most-favored-nation status and receives duty free (GSP) benefits for many of its products.
