- basic information about cuntry - current situation in Slovakia - important numbers and statistics

1. Financial and economic situation
in SLOVAKIA
University of Economics in Katowice
Mária Čechová

2. Slovakia
atglance
Surface area: 49 035 km2
Population: 5 432 931 (1st January 2016)
Capital: Bratislava
Independance: 1 January 1993 – Slovak Republic
(before as a part of Czechoslovakia)
Government: Parliamentary democracy
President: Andrej Kiska
Prime Minister: Róbert Fico

3. Where we are:
Member of the EU,
NATO, OECD, WTO,
Schengen Area
In the heart of Europe
Bordering to : Poland,
Czech Republic,
Austria, Hungary,
Ukraine

4. Important
facts...
 From centrally planned economy – to FREE
MARKET economy (after dissolution of the
Czechoslovak Republic)
 Long process of transformation
=transformation to integrate successfully into the
new globalised economy (however problem was
heavily industrial past, with a poor structure -
heavy industry, machinery and armament
industry, chemical industry)
 but after „shock“ economic reforms (taxation,
labour, pension,...) and mass privatization =
Slovakia became country with big potential and
leader among V4

5. Slovak
economyis...
small economy (the GDP value of Slovakia
represents 0.16% of the world economy,
76.521 mld. €)
very open economy (the combined
export and import)
free market economy (around 90% of the
GDP is created in the private sector)
stronghold of automotive industry (VW,
Kia, Peugeot; 183 cars / 1000 citizens)

6. SlovakiainEU
 Joined the European Union: 1 May 2004
EURO €
 Member of Eurozone: since 1 January 2009
 (formerly Slovak koruna SKK)

7. MacroeconomicOverview

8. GDP growth
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
% GDP 3.3 4.7 5.4 5.2 6.5 8.3 10.7 5.4 -5.3 4.8 2.7 1.6 1.4 2.4
In 2007, the highest GDP growth among the members
of OECD and the EU (record in Q4: level of 14.3%)
In 2009 dramatic decline due to global economic crisis
2,7
in 2015
Predictions: GDP growth of 2.9% in 2016, followed by 3.3% in 2017.

9. No. 1 within OECD and EU

10. Uneployment11 %
Oct 2015
19.79 % in
2001
7.36 %
Minimum wage in 2016: 405 €
Average wage in 2016: 902 €

11. Inflation-0,3%
2015
Prediction for 2016 : 0,7%

12. Indicator Units 2010 2011 2012 2013 2014 2015 2016
Revenues mld. EUR 10,65 13,77 12,57 12,65 12,14 14,19 14,28
Expenditures mld. EUR 15,58 18,1 16,42 14,97 15,59 16,63 16,25
Balance of
budget
mld. EUR -4,93 -4,33 -3,85 -2,32 -3,45 -2,44 -1,97
Budget deficit % of GDP 7,7 5,1 4,4 2,8 2,66 2,52 2,45
Government
gross debt
mld. EUR -27 -29,9 -37 -40 -41,3 -43,138 -44,94
Government
gross debt to
GDP
% of GDP 41,1 43,5 52,1 54,6 53,5 52,8 52,1
Source: http://www.statistics.sk/; http://www.nbs.sk/sk/titulna-stranka; http://www.finance.gov.sk/
Interesting view: http://www.rozpoctovarada.sk/rozpocet/2014/vis.html?0000

13. Government gross debt to GDP
Source: http://www.rozpoctovarada.sk/svk/rozpocet/200/

14. Trade - Export
 45th largest export
economy
 Main factor behind
Slovakia´s robust growth
 In the last years – more
than doubled
units 2010 2011 2012 2013 2014 2015
Export mld. EUR 48,3 56,4 62,8 64,4 67,62 71
The top exports of Slovakia:
Cars, video displays, vehicle parts,
refined petroleum, vehicle bodies, ...
The top export destinations:
Germany, the Czech Republic, Poland,
Hungary, Austria

15. Top companies for export:
VW Slovakia (cars)
Kia Motors (cars)
Samsung Electronics (LCD TVs and
monitors)
Slovnaft (fuels)
PSA Peugeot Citroen (cars)
Foxconn (LCD TVs)

16. Trade - Import
Units 2010 2011 2012 2013 2014 2015
Import mld. EUR 47,5 54 59,2 60,1 63,11 66,26
• 37th largest importer in the world
The top import origins of Slovakia:
• Germany, the Czech Republic, Rusia, Other Europe, South
Korea
The top imports:
• Electronic equipment, vehicles, vehicles parts, machines,
engines, oil, plastics, fuels and chemicals

17. 2010 2011 2012 2013 2014 2015
Export mld. EUR 48,3 56,4 62,8 64,4 67,62 71
Import mld. EUR 47,5 54 59,2 60,1 63,11 66,26
Trade
Balance
mld. EUR 0,8 2,4 3,6 4,3 4,151 4,741

19. Foreigndirect
investments
(FDI)
Attractiveness for foreign investors:
 cheap and skilled labour
 high adaptability of labour force to different culture
mngmt style
 19% flat tax rate (2004, nowadays- still attractive taxation)
 no dividend taxes (0%)
 strategic location (great export potential)
 tax holidays to investors
 political and economic stability (safe investment envi)
 Euro as the official currency

20. Successful project by country of origin:
USA: US Steel, Dell, Johnson Controls,
AT&T, Accenture, Amazon
Germany: Siemens, VW, T-Systems
UK: Tesco
FRA: PSA Peugeot-Citroen, Orange
South Korea: KIA Motors, Samsung,
Hyundai
China: Lenovo
Japan: Panasonic
Austria: OMV, Mercedes-Benz

21. Slovakia - the largest automobile producer
per capita in the world
Three biggest investors:
 VolksWagen
(VW Touareg, Audi Q7,
Porsche Cayenne and
recently Škoda Octavia)
 PSA Peugeot – Citroen
 KIA
 In 2018 production of Jaguar Land Rover

22. 1st place
in the World
in 2015
183 cars
per 1,000 citizens
more than
1 mil. cars
manufactured
in 2015
In 2014: 973,370 cars
VW : 394,474
KIA: 323,720
Peugeot: 255,176
automotive industry
26 % of
Slovak export
43% of
the industrial
production

23. FINANCIAL SECTOR

24. Institutions
The Slovak financial sector consists of:
commercial banks
insurance companies
securities firms
investment funds
pension funds
 leasing companies

25. Banking
sector
1
2
3

26. National
Bankof
Slovakia
Independent central bank of SR
Established on 1 January 1993
Since 2004 – part of European System
of Central Banks (ESCB)
Since 2009 – part of the Eurosystem

27. Maintask
ofthe NBS
To ensure price stability, in order to
support high employment as well as
sustainable and non-inflationary
economic growth

28. Tasks ofNBS
within
Eurosystem
 monetary policy
 foreign exchange operations and reserves
 issuing euro banknotes and coins
 payment systems
 statistics
 international cooperation
 mutual cooperation and support among central banks
 financial stability in the euro area

29. Rating
Source: www.nbs.sk
 Slovak Republic has
the highest rating
among V4 countries

30. Euroin
Slovakia

31. Maastricht
Criteriafor
Euroadoption
Criterion SR: March
2008
Reference value
State of
Fullfilment
Inflation (average (%) 2.2 3.2 
Interest rates (%) 4.5 6.5 
Public debt (% GDP) 29.4 60.0 
Public deficit (%
GDP)
2.2 3.0 
ER stability ERM II since
Nov. 2005
2 years in ERM II 
The Treaty of Maastricht of European Union, 1992
Source: www.nbs.sk

32. MISSION COMPLETED

33. Euro
Changeover
On 16 April 2003, the Slovak Republic signed the
Accession Treaty to the European Union and committed
itself to join EMU and to introduce common currency –
the euro.
On 28 November 2005, Slovak koruna (crown) entered
into exchange rate mechanism ERM II.
On 8 July 2008 the Council of the European Union at
the level of finance ministers of Member States of the
European Union (ECOFIN) set the conversation rate
between the euro and the Slovak koruna at 1 EUR =
30,126 SKK.
On 1 January 2009, „D- Day“ - the euro was
introduced in cash and non cash circulation in Slovakia
and became legal tender in the Slovak Republic.

34. 1st to 16th of January 2009 – Dual circulation –
possibility to paid in crowns and euros, the costs
displayed only in euro
30th of June 2009 – End of the exchange of crown coins
in the banks
31st of December 2009 – End of compulsory dual
display and the end of the exchange of crown
banknotes in banks
Euro
Changeover

35. Benefitsofthe
Euroadoption
DIRECT (immediate) BENEFITS
Transaction and administrative costs
 savings of financial transaction costs
amounting to 0.3% of GDP
 the savings on administrative costs (on the
human and capital resources required for the
performance of foreign exchange operations)
represents 0.06% of GDP
Exchange rate risk elimination and reduction of
volatility of the koruna exchage rate against euro

36. Benefitsofthe
Euroadoption
Price comparability
 a direct comparability of prices in the domestic
market and within the euro area countries
market
 the transparency of consumer prices - gives the
citizens a clear picture of relations between
domestic and foreign prices and it results in
increased competition
 prices in Slovakia were lower than in the euro
area and their evolution after euro adoption
was closely tied to the growth of earnings and
purchasing power of the Slovak consumers

37. Decrease of capital costs
 Increace of effectiveness and competition in financial
markets
 keeping the real interest rates at low levels or bring it
down in the future
LONG-TERM BENEFITS
 New FDI (production efficiency – cheap workforce;
increasing market share; diversifcation of risk)
 Increase in foreign trade (=crucial role of economy;
positive trade balance; larger liberalization of services
market within the EU) – export to Europe; import from
EU countries
 More dynamic economic growth
Benefitsofthe
Euroadoption

38. Costofthe
Euroadoption
One-off costs
 Technical and organizational costs of euro
conversion (0.3% of GDP) : IS, changes in relations
with employees, contractors, customers, personnel
trainng, dual prices display
Specific costs of the banking sector
 Costs in connection with the task of providing free
conversion of the domestic currency to euro and
reduction of the range of activities and revenues of
banks
Loss of the independent monetary policy (the value
of the loss 0.04% GDP)
 Limited scope of operation