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Economic and political overview

Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Slovakia has experienced sustained and steady GDP growth since its integration into the European Union in 2004, except for the financial crisis of 2008-2009 and the Eurozone crisis of 2011-2012. In recent years, the Slovak economy had returned to growth, fuelled by the return of internal and European demand. Nevertheless, the outbreak of the COVID-19 pandemic and the global crisis it caused pushed the country into a recession in 2020. The economy returned to growth in 2021 (+3%) and recorded an estimated growth of 1.8% in 2022 as high inflation weighed on private consumption and the weak performance of major export destinations hampered foreign trade, with the overall balance of trade turning negative for the first time in 14 years. For 2023, the IMF forecasts GDP growth at 1.5% driven by public investment (underpinned by plans to absorb EUR4 billion in Multi-Annual Financing Framework funds). Private consumption is expected to regain momentum only in 2024, the same as for exports, resulting in a projected growth rate of 3.4%.

In 2022, the general government budget was affected by a series of one-off measures (with energy support totalling EUR 5.5 billion), as well as by higher permanent spending both in terms of wages and transfers (including a family package costing 1% of GDP), resulting in an overall deficit of 3.3% of GDP (Fitch Ratings). For 2023, the deficit is expected to widen to 5.6% as windfall profits and EU funds will only offset some of the additional expenditure. The debt-to-GDP ratio was estimated at 60.5% in 2022 by the IMF and is expected to follow a downward trend over the forecast horizon (at 57.4% this year and 56.2% in 2024). Debt dynamics should be supported by nominal growth and stable debt-servicing costs. Inflation soared to over 11.9% in 2022 due to high energy prices and the pass-through to core components, especially food. Food prices are expected to keep pushing inflation in 2023, with a projected rate of 10.1%, before inflation gradually eases to 4.4% the following year (IMF).

The unemployment rate decreased to 6.2% in 2022 (from 6.8% one year earlier). The labour market remains tight and is set to contribute to more persistent growth of prices in the service sector in 2023. Overall, around 15.6% of the population is at risk of poverty (especially in the eastern part of the country), below the EU average of 21.7% (Eurostat, latest data available). The country’s GDP per capita (PPP) was estimated at USD 38,620 in 2022 by the IMF, 28.4% below the EU average.

 
Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 106.61116.61113.53127.53135.62
GDP (Constant Prices, Annual % Change) -3.43.01.71.32.7
GDP per Capita (USD) 19,53421,35720,89023,45824,943
General Government Balance (in % of GDP) -2.2-1.5-1.4-2.9-3.9
General Government Gross Debt (in % of GDP) 58.962.258.857.457.4
Inflation Rate (%) 2.02.812.19.54.3
Unemployment Rate (% of the Labour Force) 6.66.86.16.05.9
Current Account (billions USD) 0.59-2.92-4.87-4.42-3.50
Current Account (in % of GDP) 0.6-2.5-4.3-3.5-2.6

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

The Slovak Republic has a highly qualified labour force of 2.76 million out of its 5.4 million population. The agriculture sector is little developed and represents only 1.7% of the GDP and 3% of employment (World Bank, latest data available), although almost two-fifths of the land is arable. The main agricultural products in the country are cereals, potatoes, sugar beets, and grapes. The mountainous area of Slovakia has vast forests and pastures, which are used for intensive sheep grazing, and it is rich in mineral resources including iron, copper, lead, and zinc. According to the latest data by Eurostat, 25.4% of the Slovak agricultural output derives from cereals, followed by 15.2% from industrial crops (oil seeds, sugar beet), 12.7% from dairy, 6.7% from pig production and 6% from cattle production. The latest estimates from Statistics Slovakia show that because of several droughts, in 2022 all types of crops recorded a decline: corn for grain in 2022 will be the lowest in the last 15 years, at approximately 740 thousand tons. The harvest was estimated to reach a value almost 54% lower than that of the previous year.

The secondary sector represents 28.2% of the GDP and employs 36% of the workforce. Heavy industry sectors - such as metal and steel - are still in a restructuring phase. High-value-added industries, like electronics, engineering, and petrochemicals, are installed in the western part of the country. Sectors like automobile and consumer goods experienced a sizeable contraction during the pandemic, but have started to recover relatively fast and are offering attractive opportunities to foreign investors. Although Slovakia’s competitiveness supports the recovery of the sector, global automotive demand remains sluggish. The World Bank estimates that the manufacturing sector alone accounts for one-fourth of Slovakia’s GDP. Figures from the national statistical office show that industrial production decreased by 4.7% year-on-year in 2022. According to the main industrial groupings, production related to energy decreased by 20.4%, production of durable consumer goods by 4%, production for intermediate goods by 3.2% and production of capital goods by 1.2%. Production of non-durable consumer goods increased by 5.2%.

The services sector contributes 59.1% of the GDP and employs around 61% of the active population. It is dominated by trade and real estate. The development of tourism may also become important for the Slovak economy in the coming years, as it has been one of the country's most dynamic sectors before the outbreak of the COVID-19 crisis. The sector showed signs of recovery in 2022, when accommodation establishments achieved a turnover worth almost EUR 434 million (excluding VAT), almost doubling the level of the previous year. The country’s banking sector consists of 26 financial institutions, it is strong and largely owned by foreign groups (mostly from Austria, Italy, and Belgium; whereas only four are owned by Slovakians, of which one is controlled by the government – data EBF).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.8 36.1 61.1
Value Added (in % of GDP) 1.7 28.2 59.1
Value Added (Annual % Change) -5.4 2.5 2.2

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 USD 0.940.890.850.890.88

Source: World Bank - Latest available data.

 

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Foreign Trade

Slovakia remains strongly dependent on external markets, with foreign trade representing 170.6% of its GDP (World Bank, latest data available). Slovakia's strong industrial tradition, tax incentives, inexpensive and skilled workforce, rapidly developing infrastructure (boosted by an influx of EU funds) and fragile but real growth, make the country a preferred base for trade. The country also benefits from an advantageous geographical location at the crossroads of Central Europe. The country represents a platform of re-exportation for the European automotive industry. In terms of product category, in 2022 the country mainly exported machinery and transport equipment (57.7%), manufactured goods (16.9%), and chemical products (4.9%); while imports were led by machinery and transport equipment (43.8%), manufactured goods (14.2%), mineral fuels (14.1%), and food (5.1% - data Statistics Slovakia).
In 2022, Europe accounted for 88.6% of total exports and 73.9% of imports. On a country basis, Germany (21.7%), the Czech Republic (11.6%), Poland (8.3%), Hungary (7.2%), and France (6.4%) were the main destinations of Slovakia’s exports; whereas the main suppliers were Germany (19.1%), the Czech Republic (9.8%), China (7.3%), Russia (6.3%), and Poland (5.6% - data WTO).

Historically, Slovakia has an overall positive trade balance, though it has been decreasing over the last few years. For the last 14 years, the export of goods exceeded the import, but in 2022 the balance ended with significantly negative values: exports of goods totalled EUR 95.1 billion (+16.1 yeat-on-year) against EUR 98.2 billion in imports, up by 23.6% y-o-y. Higher prices of selected energies and materials had a significant impact on the record-high import.

 
Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 83,30492,90290,00184,464103,499
Exports of Goods (million USD) 84,46993,42589,50986,104103,557
Imports of Services (million USD) 9,37410,96410,9238,88910,246
Exports of Services (million USD) 10,34412,03112,28210,08311,187

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 188.1189.8183.5168.5187.8
Trade Balance (million USD) 654-252-1,2611,241-574
Trade Balance (Including Service) (million USD) 1,6578471032,33272
Imports of Goods and Services (Annual % Change) 4.14.82.2-8.212.1
Exports of Goods and Services (Annual % Change) 3.75.10.8-6.410.6
Imports of Goods and Services (in % of GDP) 93.094.091.683.494.0
Exports of Goods and Services (in % of GDP) 95.195.891.985.193.8

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change) 2.02.63.33.43.5
Volume of imports of goods and services (Annual % change) 2.92.92.33.03.0

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
International Economic Cooperation
Slovakia is a member of the European Union. It is also a member of the European Economic Area (EEA) which has guaranteed, since 1 January 1993, the free movement of most goods between the European countries.
Multilateral and bilateral agreements with many countries.
 

Main Partner Countries

Main Customers
(% of Exports)		 2021
Germany 21.7%
Czech Republic 11.6%
Poland 8.3%
Hungary 7.2%
France 6.4%
See More Countries 44.7%
Main Suppliers
(% of Imports)		 2021
Germany 19.1%
Czech Republic 9.8%
China 7.3%
Poland 5.6%
South Korea 5.4%
See More Countries 52.9%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Zuzana Čaputová (since 15 June 2019)
Prime Minister: Eduard HEGER (since 1 April 2021)
Next Election Dates
Presidential: March 2024
National Council: February 2024
Main Political Parties
Slovakia has a multi-party system, and parties need to work with each other to form coalition governments. The main political parties in the country are:

- Ordinary People and Independent Personalities (OL-NO): catch-all, populist, anti-corruption
- Direction-Social Democracy (Smer-SD): left-wing
- We Are Family (Sme rodina): centre-right
- Freedom & Solidarity (SaS): centre-right, described as eurosceptic
- For the People (Za ľudí): centrist, liberalism
- Slovak National Party (SNS): right-wing, nationalist
- Voice – Social Democracy (HLAS-SD): social-democratic, pro-European
- Most-Híd: centre, liberal, looks to expand understanding between ethnic Slovaks and Hungarians
- Christian Democratic Movement (KDH): centre-right
- New Majority (NOVA): centre-right, liberal

Other parties include:

- Progressive Slovakia (PS): social-liberalism, pro-environment
- Slovak Conservative Party (SKS): centre-right, social conservatism
- Party of the Hungarian Community (SMK-MKP): centre-right , Hungarian minority
- Together (SPOLU): liberal-conservative

Executive Power
The President is the head of state and is elected by direct universal suffrage for a five-year term renewable once. Following the parliamentary elections, the leader of the majority party or the leader of a majority coalition is usually designated Prime Minister by the President and approved by the National Council with a vote of confidence, to serve a four-year term. The Prime Minister is the head of the Government and enjoys the executive powers, which include implementation of the law in the country and running the day-to-day affairs. The cabinet is appointed by the President on the recommendation of the Prime Minister.
Legislative Power
The legislature is unicameral in Slovakia. The parliament, called National Council, consists of 150 seats; its members are elected on the basis of proportional representation to serve four-year terms. The executive branch of government is directly or indirectly dependent on the support of the National Council, often expressed through a vote of confidence. Legislative power is vested in the National Council. The Prime Minister cannot dissolve the parliament, but the President has the authority to do it if circumstances require so. The people of Slovakia enjoy considerable political rights.
 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Slovakia, please visit the portal Korona.gov.sk with the official data. Official information on the progress of the epidemic in the country is consolidated by the National Health Information Centre (NHIC).
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures

To find out about the latest public health situation in Slovakia and the current sanitary measures in vigour, please consult the website of the Ministry of Health including the up-to-date information on the containment measures put in place. For further information refer to the website of the Health Policy Institute. Public health recommendations can be found on the portal Korona.gov.sk (in Slovak).
Travel restrictions

The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.
The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions

For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the dedicated pages on the website of the Ministry of Economy (in Slovak). Following the measures taken by the European Commission, an export license is required to export personal protective equipment outside of the European Union.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Slovakia on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan

To know about the economic measures taken by the Slovak government to address the impact of the COVID-19 pandemic on the national economy, please visit the dedicated pages on the website of the Ministry of Economy (in Slovak). Further information can be retrieved on the website of the national Financial Administration (in Slovak). For an overview in English of the measures, consult the guide by Deloitte.
The information on the EU’s economic response to COVID-19 and the actions to minimise the fallout on the EU member states’ economies of the COVID-19 outbreak is available on the websites of the European Commission and the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Slovak government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Slovakia in the IMF’s Policy Tracker platform.
Support plan for businesses

For the information on the local business support scheme and taxation measures established by the Slovak government to help businesses to deal with the economic impacts of the COVID-19 epidemic on their activity, please consult the website of the Slovak Investment and Trade Development Agency (SARIO). Further information can be retrieved on the website of the national Financial Administration (in Slovak).
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.
Support plan for exporters

To find out about the support plan for exporters put in place by the Slovak government, please consult the website of the Slovak Investment and Trade Development Agency (SARIO). The national import-export bank EximBanka provides products especially developed to support exporting companies amid the COVID-19 crisis.
The European Commission adopted a Temporary Framework for State aid measures to support the economy in the COVID-19 outbreak, which enables short-term export credit insurance to be provided by the State where needed.
 

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