Slovakia: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response
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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 | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 106.61 | 116.61 | 113.53 | 127.53 | 135.62 |
| GDP (Constant Prices, Annual % Change) | -3.4 | 3.0 | 1.7 | 1.3 | 2.7 |
| GDP per Capita (USD) | 19,534 | 21,357 | 20,890 | 23,458 | 24,943 |
| General Government Balance (in % of GDP) | -2.2 | -1.5 | -1.4 | -2.9 | -3.9 |
| General Government Gross Debt (in % of GDP) | 58.9 | 62.2 | 58.8 | 57.4 | 57.4 |
| Inflation Rate (%) | 2.0 | 2.8 | 12.1 | 9.5 | 4.3 |
| Unemployment Rate (% of the Labour Force) | 6.6 | 6.8 | 6.1 | 6.0 | 5.9 |
| 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 , Latest available data
Note: (e) Estimated Data
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.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Euro (EUR) - Average Annual Exchange Rate For 1 MUR | 0.03 | 0.03 | 0.02 | 0.03 | 0.02 |
Source: World Bank - Latest available data.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025
See the country risk analysis provided by Coface.
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 Indicators | 2017 | 2018 | 2019 | 2020 | 2021 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 83,304 | 92,902 | 90,001 | 84,464 | 103,499 |
| Exports of Goods (million USD) | 84,469 | 93,425 | 89,509 | 86,104 | 103,557 |
| Imports of Services (million USD) | 9,374 | 10,964 | 10,923 | 8,889 | 10,246 |
| Exports of Services (million USD) | 10,344 | 12,031 | 12,282 | 10,083 | 11,187 |
| Imports of Goods and Services (Annual % Change) | 4.1 | 4.8 | 2.2 | -8.2 | 12.1 |
| Exports of Goods and Services (Annual % Change) | 3.7 | 5.1 | 0.8 | -6.4 | 10.6 |
| Imports of Goods and Services (in % of GDP) | 93.0 | 94.0 | 91.6 | 83.4 | 94.0 |
| Exports of Goods and Services (in % of GDP) | 95.1 | 95.8 | 91.9 | 85.1 | 93.8 |
| Trade Balance (million USD) | 654 | -252 | -1,261 | 1,241 | -574 |
| Trade Balance (Including Service) (million USD) | 1,657 | 847 | 103 | 2,332 | 72 |
| Foreign Trade (in % of GDP) | 188.1 | 189.8 | 183.5 | 168.5 | 187.8 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2022 |
|---|---|
| Germany | 21.0% |
| Czech Republic | 12.0% |
| Hungary | 8.7% |
| Poland | 7.8% |
| France | 5.9% |
| See More Countries | 44.7% |
| Main Suppliers (% of Imports) |
2022 |
|---|---|
| Germany | 14.0% |
| Czech Republic | 9.0% |
| China | 7.5% |
| Russia | 7.5% |
| South Korea | 5.7% |
| See More Countries | 56.4% |
Source: Comtrade, Latest Available Data
Source: Comtrade, Latest Available Data
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Source: United Nations Statistics Division, Latest Available Data
- 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
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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Latest Update: September 2023
