Economic and Political Overview

flag Slovakia 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

 

Economic Indicators

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, the Eurozone crisis of 2011-2012, and the COVID-19 pandemic. After growing 1.7% in 2022, the Slovak economy decelerated to 1.1% in 2023 due to reduced private and public consumption accompanied by a decline in exports and imports, coupled with inventory reductions, reflecting the weakening economic prospects in its primary export markets (EU Commission). The economic growth outlook for 2024 and 2025 stands at 2.3% and 2.6% respectively. Real wage hikes are expected to bolster private consumption, offering an additional stimulus. Furthermore, the absorption of EU funds is anticipated to significantly contribute to investment growth (EU Commission).

In 2023, the general government budget saw a significant deterioration due to heightened social transfers, raises in public sector wages, increased interest rates, amplified military spending, and temporary measures to support energy schemes benefiting households and firms. The deficit was estimated at 6.5% of GDP by national authorities. The EU Commission raised concerns about the 2024 budget, projecting the deficit at 6.3% in 2024. Similarly, the debt-to-GDP ratio is on an upward trajectory according to Fitch Ratings, which expects it to rise to 62.1% by end-2025 from 57.8% at end-2022. Interest costs, however, are anticipated to increase gradually, attributed to a favorable redemption profile characterized by an average maturity of 8.5 years and predominantly fixed-rate debt structures. As per the EU Commission, inflation surged to 11% in 2023, driven by elevated energy prices and their subsequent influence on other components. In 2024, the inflation rate is projected to decrease to 3.5%, largely due to the anticipated moderation in energy and consumer food prices. However, the persistent effects of energy prices and a constrained labor market are expected to exert upward pressure on prices within the service sector. By 2025, inflation is forecasted to decline further to 2.6%.

The unemployment rate decreased to 6.1% in 2023 (from 6.2% one year earlier) and is expected to hover around 5.9% in the short term, while the labor market remains tight. Overall, around 15.6% of the population is at risk of poverty (especially in the eastern part of the country), less than the EU average of 21.6% (Eurostat, latest data available). The country’s GDP per capita (PPP) was estimated at USD 37,459 in 2022 by the World Bank, 31% below the EU average.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 115.56133.04145.25153.90161.48
GDP (Constant Prices, Annual % Change) 1.71.32.52.82.8
GDP per Capita (USD) 21,26324,47126,71428,31129,719
General Government Balance (in % of GDP) -0.8-3.7-4.3-4.4-4.5
General Government Gross Debt (in % of GDP) 57.856.756.557.560.3
Inflation Rate (%) n/a10.94.82.31.9
Unemployment Rate (% of the Labour Force) 6.26.15.95.95.9
Current Account (billions USD) -9.42-3.55-5.75-5.23-4.36
Current Account (in % of GDP) -8.2-2.7-4.0-3.4-2.7

Source: IMF – World Economic Outlook Database , Latest available data

Note: (e) Estimated Data

Main Sectors of Industry

The Slovak Republic boasts a highly qualified labor force of 2.81 million out of its 5.44 million population. The agriculture sector is minimally developed and represents only 2.2% of the GDP and 3% of employment (World Bank, latest data available), although nearly 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 features vast forests and pastures, which are utilized for intensive sheep grazing, and it is rich in mineral resources including iron, copper, lead, and zinc. According to the second estimate of yield by the Statistical Office of Slovakia, farmers expected to harvest approximately 3.2 million tons of densely sown cereals in 2023, representing an increase of 469,000 tons compared to the previous year. This marks a double-digit year-on-year growth of over 17%, primarily driven by significantly higher yields per hectare, reaching 5.7 tons. These yields surpass the five-year historical average.

The secondary sector represents 28.5% of the GDP and employs 36% of the workforce. Heavy industry sectors - such as metal and steel - are still undergoing a restructuring phase. High-value-added industries, like electronics, engineering, and petrochemicals, are concentrated in the western part of the country. Sectors like automobiles and consumer goods experienced a significant 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 0.6% year-on-year in 2023. The automobile industry experienced a year-on-year growth of 4.9%, the highest seen since 2018. Additionally, the manufacture of electrical equipment saw a positive impact with a growth rate of 7.4%. However, the manufacturing of rubber and plastic products witnessed a significant negative influence, declining by 8.9%, while manufacturing computer products experienced a notable 22% decrease.

The services sector contributes 58.5% of the GDP and employs around 62% 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 2023 when accommodation establishments achieved a turnover worth almost EUR 563 million (excluding VAT), representing a year-on-year increase of 30%. 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). In 2023, turnover in retail trade reached a 4.5% lower value in constant prices than in 2022 (Statistics Slovakia).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 2.5 36.7 60.8
Value Added (in % of GDP) 2.2 28.6 58.3
Value Added (Annual % Change) 2.3 -0.4 2.5

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 MUR 0.030.030.020.030.02

Source: World Bank - Latest available data.

 
 

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Indicator of Economic Freedom

Definition:

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.

Score:
66,3/100
World Rank:
61
Regional Rank:
33

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

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.

Score:
6.88/10
World Rank:
37/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Slovakia remains strongly dependent on external markets, with foreign trade representing 170.6% of its GDP (World Bank, latest data available). The country'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 it a preferred base for trade. Slovakia also benefits from an advantageous geographical location at the crossroads of Central Europe, representing a platform for re-exportation for the European automotive industry. In terms of product categories, 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 (20.9%), the Czech Republic (12.1%), Hungary (8.7%), Poland (7.7%), and France (58%) were the main destinations of Slovakia’s exports; whereas the main suppliers were Germany (14.1%), the Czech Republic (9.1%), China (7.5%), Russia (7.4%), South Korea (5.7%), and Poland (5.5% - 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 totaled EUR 95.1 billion (+16.1 year-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. Nevertheless, according to preliminary data by Statistics Slovakia, the trade balance in goods returned to positive territory in 2023: exports surged by 5.4%, surpassing EUR 108 billion, while imports dropped by 2.9% totaling EUR 104 billion. Both export and import values crossed the EUR 100 billion mark, marking the highest volume since 2010.

 
Foreign Trade Indicators 20182019202020212022
Imports of Goods (million USD) 92,90290,00184,393103,891112,471
Exports of Goods (million USD) 93,42589,50986,640103,891107,771
Imports of Services (million USD) 10,98310,9299,07410,68512,165
Exports of Services (million USD) 12,07812,29410,31611,33012,564
Imports of Goods and Services (Annual % Change) 4.82.2-8.112.14.0
Exports of Goods and Services (Annual % Change) 5.10.8-6.310.92.3
Imports of Goods and Services (in % of GDP) 94.091.683.492.4104.8
Exports of Goods and Services (in % of GDP) 95.891.985.192.499.1
Trade Balance (million USD) -252-1,2611,241-574-6,960
Trade Balance (Including Service) (million USD) 8471032,33272-6,561
Foreign Trade (in % of GDP) 189.8183.5168.5184.7203.9

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2022
Germany 20.9%
Czech Republic 12.1%
Hungary 8.7%
Poland 7.7%
France 5.8%
See More Countries 44.7%
Main Suppliers
(% of Imports)
2022
Germany 14.1%
Czech Republic 9.1%
China 7.5%
Russia 7.4%
South Korea 5.7%
See More Countries 56.2%

Source: Comtrade, Latest Available Data

 
 

Main Products

108.2 bn USD of products exported in 2022
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 24.2%
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 5.0%
Monitors and projectors, not incorporating...Monitors and projectors, not incorporating television reception apparatus; reception apparatus for television, whether or not incorporating radio-broadcast receivers or sound or video recording or reproducing apparatus 4.4%
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 3.6%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 2.5%
See More Products 60.3%
115.8 bn USD of products imported in 2022
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 10.9%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 5.6%
Telephone sets, incl. telephones for cellular...Telephone sets, incl. telephones for cellular networks or for other wireless networks; other apparatus for the transmission or reception of voice, images or other data, incl. apparatus for communication in a wired or wireless network [such as a local or wide area network]; parts thereof (excl. than transmission or reception apparatus of heading 8443, 8525, 8527 or 8528) 5.3%
Electrical energyElectrical energy 3.0%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 2.6%
See More Products 72.7%

Source: Comtrade, Latest Available Data

 
 

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Sources of General Economic Information

Ministries
Ministry of the Economy
Ministry of Finance
Ministry of Interior
Statistical Office
Statistical Office of the Slovak Republic
Central Bank
National Bank of Slovakia
Stock Exchange
Bratislava Stock Exchange
Search Engines
Zoznam
Ezilon Slovakia
Economic Portals
Slovakia information portal

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Political Outline

Current Political Leaders
President: Zuzana Čaputová (since 15 June 2019)
Prime Minister: Robert Fico (since 25 October 2023)
Next Election Dates
Presidential: 23 March 2024
National Council: 2027
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:

- Direction-Social Democracy (Smer-SD): left-wing
- Progressive Slovakia (PS): centre, social-liberalism, pro-environment
- Voice – Social Democracy (HLAS-SD): social-democratic, pro-European
- Slovak National Party (SNS): right-wing, nationalist
- Ordinary People and Independent Personalities (OLaNO): catch-all, populist, anti-corruption
- Christian Democratic Movement (KDH): centre-right
- Freedom & Solidarity (SaS): centre-right, described as eurosceptic

Other parties include:

- For the People (Za ľudí): centrist, liberalism
- We Are Family (Sme rodina): centre-right
- Most-Híd: centre, liberal, looks to expand understanding between ethnic Slovaks and Hungarians
- New Majority (NOVA): centre-right, liberal
- Slovak Conservative Party (SKS): centre-right, social conservatism
- Party of the Hungarian Community (SMK-MKP): centre-right , Hungarian minority
- Together (SPOLU): liberal-conservative

Type of State
Slovakia is a Republic based on parliamentary democracy.
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.
 

Indicator of Freedom of the Press

Definition:

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.).

World Rank:
35/180
 

Indicator of Political Freedom

Definition:

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.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
The summary of the EU’s economic response to the COVID-19 pandemic is available on the website of the European Council.
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) in Slovakia, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.

 

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Latest Update: April 2024