COUNTRY ANALYSIS REPORT

Slovakia
In-depth PEST Insights
Publication Date: December 2010

Catalyst
This profile analyzes the political, economic, social, and technological structures in Slovakia.

SUMMARY
Key highlights
• Post independence and through most of the 1990’s, Slovakia’s political scene was dominated by Vladimir Meciar. Apart from a nine month interlude in 1994, Meciar’s somewhat ironically titled “movement for a democratic Slovakia” had governed Slovakia from independence until 1998. • In October 1998, following parliamentary elections, Meciar’s authoritarian coalition was replaced by a reformminded and broad-based coalition headed by the center-right politician Mikulas Dzurinda. • A referendum on EU membership in May 2003 saw a “yes” vote of more than 90%. With the result never in any doubt, voter apathy was widespread, reflected in a turnout only marginally in excess of the 50% threshold. Subsequently, Slovakia officially joined the EU in 2004. • Progress on structural reforms since 1998 has been impressive. Privatization and liberalization have encouraged inward investment, and the tax system has been simplified. • In the most recent parliamentary elections that were held in June 2010, the Slovak Democratic and Christian Union-Democratic Party (SDKU-DS), Freedom and Solidarity (SaS), the Christian Democratic Movement (KDH), and Most-Hid collectively won around 44% of the vote. Iveta Radicova from the SDKU-DS party was appointed prime minister in July 2010. • Economic growth was robust during 2001–08, with the real GDP growth averaging around 6.2%. The growth rate fell from 10.4% in 2007 to 6.4% in 2008. By the end of 2009, the economy contracted by 4.7% as a result of the global economic crisis.

Slovakia: Country Analysis Report–In-depth PEST Insights
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Summary

According to the most recent figures by the Eurostat, Slovakia's budget deficit for 2009 reached 7.9% of its GDP as the former government increased spending substantially amid the global economic crisis. For 2010, the incumbent government aims to reduce the budget deficit to 5.5% of the projected GDP.

The incumbent government plans to implement austerity measures in 2011 in order to consolidate public finances.

In a bid to reduce the budget deficit, the government has plans to reduce spending for higher education and science in 2011.

The Slovak government set itself the goal of investing 1.8% of its GDP in R&D by 2015; R&D spending stood at 1.2% of GDP as of 2009. The government launched an E1.2 billion-special operational program dedicated to meeting its R&D target.

Key fundamentals
Table 1: Slovakia – key fundamentals
2008 GDP, constant 2000 prices ($billion) GDP growth rate (%) Inflation (%) Exports as a % of GDP Imports as a % of GDP Mid-year population, total (million) Unemployment rate (%) Mobile penetration (per 100 people) 33.0 6.4 3.9 82.7 86.3 5.45 9.6 105.0 2009 31.5 -4.7 1.6 68.8 69.8 5.46 12.1 106.5 2010 32.6 3.5 1.1 72.9 68.0 5.47 15.1 109.0 2011 33.9 3.9 2.7 73.2 69.1 5.48 14.3 111.4 2012 35.1 3.7 2.9 73.5 70.1 5.48 14.3 113.7 2013 36.6 4.2 3.0 73.8 71.1 5.49 14.0 115.7 2014 38.1 4.1 2.7 74.1 72.1 5.49 13.9 117.3

Source: Datamonitor

DAT AMONITOR

Slovakia: Country Analysis Report–In-depth PEST Insights
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Table of Contents

TABLE OF CONTENTS
Catalyst Summary Key facts and geographic location Key facts Geographical location Political landscape Summary Evolution Structure and policies Performance Outlook Economic landscape Summary Evolution Structure and policies Performance Outlook Social landscape Summary Evolution Structure and policies Performance Outlook Technological landscape Summary Evolution Structure and policies Performance Outlook APPENDIX APPENDIX 1 1 7 7 8 9 9 9 10 13 14 15 15 15 16 18 27 28 28 28 28 31 32 34 34 34 34 35 37 38 38

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This brief is a licensed product and is not to be photocopied Published 12/2010 Page 4 .Table of Contents Ask the analyst Datamonitor consulting Disclaimer 38 38 38 Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.

2002–09 Figure 10: Industrial output in Slovakia. 2004–09 Figure 7: GDP and GDP growth rate of Slovakia (constant prices). 2002–13 8 9 10 12 16 17 18 19 20 21 22 24 25 27 30 32 35 36 Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. 2002–13 Figure 18: Internet users in Slovakia. 2002–09 Figure 13: Consumer price index and CPI-based inflation in Slovakia. 2009 Figure 9: Agricultural output in Slovakia. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 5 . 2002–13 Figure 15: Major religions in Slovakia Figure 16: Healthcare expenditure in Slovakia. 2002–13 Figure 17: Growth of fixed and mobile phones in Slovakia.Table of Contents TABLE OF FIGURES Figure 1: Map of Slovakia Figure 2: Slovakia – key political events timeline Figure 3: Slovakia – Key political figures Figure 4: Distribution of seats by political parties in the 2010 parliamentary elections in Slovakia Figure 5: Evolution of GDP growth in Slovakia. 1991–2009 Figure 6: Market capitalization of the BSSE. 2002–09 Figure 12: Slovakia’s trade position. 2002–09 Figure 11: Services output in Slovakia. 2002–13 Figure 14: Unemployment in Slovakia. 2002–13 Figure 8: Sector specific GDP in Slovakia.

Table of Contents TABLES Table 1: Slovakia – key fundamentals Table 2: Slovakia – key facts Table 3: Mid-year population by age (millions) in 2009 2 7 29 Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 6 .

This brief is a licensed product and is not to be photocopied Published 12/2010 Page 7 . base metals.8%. machinery and electrical equipment.100 Internet domain .2% Country area Language Exports Imports 49.7%.Key facts and geographic location KEY FACTS AND GEOGRAPHIC LOCATION Key facts Table 2: Slovakia – key facts Country and capital Full name Capital city Slovakia Bratislava Government Government type Head of state Head of government Republic President Ivan Gasparovic Prime Minister Iveta Radicova Population 5. Roma 1. chemicals. Roma.74years (women) Ethnic composition Slovak 85. Hungarian.7%. Major exports include motor vehicles. other and unspecified 1. Hungarian 9. chemicals and minerals.8% Greek Catholic – 4.62 years (total population) 71. Machinery and transport equipment. Ruthenian/Ukrainian 1%.7 years (men) 79.sk Demographic details Life expectancy 75.46 million Currency Euro GDP per capita (PPP) $21.035 sq km Slovak (official). and miscellaneous manufactured goods. intermediate manufactured goods. and plastics.1% Others (mostly Muslims) and unspecified – 3. Ukrainian and other.9% Protestant – 10. fuels.8% Major religions Roman Catholic – 68. DAT AMONITOR Source: CIA Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.

Its northern border is shared with Poland. Figure 1: Map of Slovakia Source: CIA The World Factbook DAT AMONITOR Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. The Czech Republic and Austria share borders to the west of Slovakia and the Ukraine borders Slovakia to the east. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 8 .Key facts and geographic location Geographical location Slovakia is located in central Europe. while Hungary is to the south.

membership. powers. proIn mid 1999. However. As a result. •• In 2001. The last parliamentary elections were held on June 12. ratified EU constitution. •• In 1995. presidential elections. Slovakia In mid 2004. a law In late 1995. Prime successor. come into force in April. Parliament split. condemnation. •• In 2004. the In July 2009. •• In 2002. the parliament passed a new parliament passed a new language law. parliament In 2005. It Hungarian citizenship. •• In April 2009. it has since moved to the forefront of the transition states. eight new In 2002. where President can be President can be elected by the people. Slovakia's attempts to emerge from its shaky past got off to a resounding start with the appointment of the centrist Prime Minister Mikulas Dzurinda’s coalition administration in 2002. Slovaks voted in In 2003. increased the authority of the state authority of the state audit office. government. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 9 . Slovakia protested at Hungarian protested at Hungarian parliament's decision to parliament's decision to allow ethnic Hungarians allow ethnic Hungarians living abroad to apply for living abroad to apply for Hungarian citizenship. Parliament elected Michal Kovac elected Michal Kovac of the Movement for a of the Movement for a Democratic Slovakia Democratic Slovakia (MDS) as the (MDS) as the president. •• In January 2009. President In March 2010. the ambitious economic and political reform program initiated by the Dzurinda government did not convince the domestic voter. the country In 1995. 2010. increased the Slovakia. This Rate Mechanism. Iveta In July 2010. eight new regional parliaments were regional parliaments were created under amended created under amended constitution. there was a In 1998. Hungary. •• In late 1995. new coalition In 1994. •• In mid 1999. was elected president. the By December 2007. elected by the people. This was a significant step was a significant step towards membership of towards membership of euro zone. euro zone. •• In March 2010. Ivan In April 2009. new coalition led by Jozef Moravcik led by Jozef Moravcik of Democratic Union of of Democratic Union of Slovakia formed the Slovakia formed the government. Slovakia became one of 10 new became one of 10 new states that joined the EU. Monday morning. •• In mid 2004. a law restricting official use restricting official use of any language other of any language other than Slovak gave rise than Slovak gave rise to international to international condemnation. the country In 1993. parliament approved far reaching approved far reaching changes to the country's changes to the country's constitution. •• In November 2005. left-wing In July 2006. parliament In 2001. Slovakia was admitted to the NATO. government buildings. minister. minority rights. Ivan Gasparovic became the Gasparovic became the first Slovak president to first Slovak president to win a re-election. Ivan Gasparovic In 2004. •• In July 1999. parliament approved parliament approved the law to improve the the law to improve the status of minority status of minority languages. troops from Iraq. •• The new constitution The new constitution decentralized power in decentralized power in Slovakia. In November 2005. In January 2009. Slovakia joined the Slovakia joined the European Exchange European Exchange Rate Mechanism. It retaliated by threatening retaliated by threatening to strip any Slovak who to strip any Slovak who applied for dual applied for dual nationality of their Slovak nationality of their Slovak citizenship. president. the country withdrew all its country withdrew all its troops from Iraq. •• In 2003. Prime Minister Meciar Minister Meciar assumed presidential assumed presidential powers. •• In May 2010. pushing through ambitious economic and political reforms to achieve EU membership in 2004. Source: Datamonitor DAT AMONITOR Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. the country signed Treaty of signed Treaty of Friendship and Friendship and Cooperation with Cooperation with Hungary. and Iveta Radicova of the Slovak Democratic and Christian Union-Democratic Party was appointed prime minister. admitted to the NATO. that was a key step towards gaining key step towards gaining membership of the EU membership of the EU and Nato. •• By December 2007. President Gasparovic vetoed a Gasparovic vetoed a patriotism law due to patriotism law due to come into force in April. that was a constitution. left-wing opposition leader Robert opposition leader Robert Fico became the prime Fico became the prime minister. Although Slovakia initially struggled to adapt to its newfound single status. there was a constitutional constitutional stalemate as President stalemate as President Kovac’s term ended Kovac’s term ended and parliament failed and parliament failed to appoint an to appoint an successor. •• In July 2006. the parliament In 1999. Slovakia adopted the Slovakia adopted the euro. which language law. Evolution Figure 2: Slovakia – key political events timeline Pre –1998 1998–2001 2001–04 2005–09 2010 Onwards •• In 1993. euro. in the June 2006 elections. where constitution. Slovakia was In 2004. •• In July 2010. states that joined the EU. Ivan Gasparovic was elected president. the country attained independence attained independence after Czechoslovakia after Czechoslovakia split. strengthened the independence of the the independence of the judiciary and gave judiciary and gave greater recognition to greater recognition to minority rights. •• In 1998. citizenship. The law would require The law would require schools to display schools to display symbols of Slovak symbols of Slovak statehood in every statehood in every classroom and to play the classroom and to play the national anthem every national anthem every Monday morning. the left-wing Direction-Social Democracy party led by Robert Fico won the elections and subsequently became the prime minister. June. •• In July 2009. languages. and Nato. •• In 2005. •• In 1994. Slovaks voted in referendum in favor of EU referendum in favor of EU membership. Iveta Radicova of the SDKURadicova of the SDKUDS party was appointed DS party was appointed prime minister following prime minister following parliamentary elections in parliamentary elections in June. parliament ratified EU constitution. •• In 2004. win a re-election.Political landscape POLITICAL LANDSCAPE Summary Slovakia and the Czech Republic—formerly joined as Czechoslovakia—split in 1993 in the so-called “Velvet Divorce”. proWestern candidate Western candidate Rudolf Schuster won Rudolf Schuster won country's first direct country's first direct presidential elections. which allowed fines to be allowed fines to be imposed for using a imposed for using a minority language in minority language in government buildings. •• In 1999. strengthened audit office. In July 1999. constitution. the parliament amended the amended the constitution. Slovakia In May 2010.

He formed a new party Hnutie za demokraciu (HZD) Movement for Democracy in 2002. a new constitution was ratified in 1993 and amended in 2001. After the split of Czechoslovakia. Legislature Slovakia has a unicameral legislature. Both regions and districts are units of state administration and self-governing entities. He began his political career as the vicepresident of legislative council of Czechoslovakia in 1992. She was sworn into office on July 8. He was one of the authors of the constitution of Slovakia in 1992. other legal acts and also formulates the state budget.Political landscape Structure and policies Key political figures • • Head of the state: President Ivan Gasparovic. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 10 . 2010 as the head of a four-party center-right coalition government following the 2010 parliamentary election. constitutional statutes. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Provincial governments Slovakia is divided into eight regions and 79 districts or okres. Figure 3: Slovakia – Key political figures Ivan Gasparovic has been the president of Slovakia since 2004. The National Council of the Slovak Republic (Narodna Rada Slovenskej Republiky) comprises150 seats and members are elected on the basis of proportional representation to serve four-year terms. he was a member of the parliamentary Committee for the Supervision of the Slovak Secret Service (SIS). Source: Datamonitor DAT AMONITOR Structure of government Slovakia is a parliamentary democracy with president as the head of the state. From October 1998 to 15 July 2002. Iveta Radicova is Slovakia's first female prime minister. Iveta Radicova is the current prime minister of Slovakia and a member of the Slovak Democratic and Christian Union – Democratic Party. The president is the supreme commander of the armed forces and he nominates the prime minister. Head of the government: Prime Minister Iveta Radicova. The National Council approves the constitution. He became speaker of the National Council of the Slovak Republic (NRSR) in June 1992. The prime minister is head of the government and council of ministers form the cabinet. The president is elected by vote and is limited to serve two five-year terms.

and Christian Democratic Movement (KDH). This brief is a licensed product and is not to be photocopied Published 12/2010 Page 11 . Iveta Radicova from the SDKU-DS party was appointed prime minister in July 2010. The party has a conservative philosophy and follows the Christian democratic ideology. and Most-Hid. The party was founded in 1989 and was part of government coalitions several times during 1992–94 and 1994–98. The four parties collectively occupy 79 of the 150 parliamentary seats. the Christian Democratic Movement (KDH). Robert Fico established SMER after he broke away from SDL. The SDKU was part of the coalition led by Dzurinda along with party of Hungarian coalition during 2002–06. the party won 62 seats out of total 150 seats. the party emerged second largest by winning 28 seats out of total 150 seats. Other parties The other political parties of Slovakia include the People's Party – Movement for a Democratic Slovakia (LS-HZDS). with the objective of strengthening their legal status and ensuring them an equal position in the society.Political landscape Structure of legislature Key political parties Direction–Social Democracy (SMER) SMER was part of the Party of Democratic Left (SDL) until 1999. which won 15 seats in the 2010 parliamentary elections. Slovak Democratic and Christian Union – Democratic Party (SDKU-DS) This party was formed after Slovak Democratic and Christian Union merged with Democratic Party in January 2006. Composition of government Slovakia is governed by a centre-right coalition comprising the Slovak Democratic and Christian Union-Democratic Party (SDKU-DS). mainly due to popularity of its members. In the national council elections held in June 2010. Slovak National Party (SNS) The SNS is a right-wing socialist ultra-nationalist political party in the country. Soon it became one of the largest parties of the nation. The party was founded in 1998. Freedom and Solidarity (SaS). Party of the Hungarian Coalition (SMK) The Party of the Hungarian Coalition is a right-wing political party that supports Hungarian minority interests. after increased differential treatment for Hungarian minorities within Slovakia. In the 2010 national council elections. The party represents the Hungarian community in Slovakia. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.

the overall tax revenue as a percentage of GDP in Slovakia was 29.7%. In order to slash the budget deficit.Political landscape Figure 4: Distribution of seats by political parties in the 2010 parliamentary elections in Slovakia Slovak National Party or SNS 6% Most-Hid 9% SMER 41% Christian Democratic Movement or KDH 10% Freedom and Solidarity or SaS 15% Slovak Democratic and Christian UnionDemocratic Party or SDKU-DS 19% Source: Datamonitor DAT AMONITOR Key policies The Slovak economy is characterized by one of the lowest overall tax takes in the region. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 12 . the tax system was massively simplified. general government revenue has fallen from more than 40% of GDP to less than 36%. Since 1998. the incumbent government plans to undertake austerity measures in 2011. The country’s macroeconomic volatility is still a concern and unemployment remains stubbornly high. with one of the region’s lowest tax burdens. The “flat tax” reform has seen the share of income taxes (including corporate income tax) cut by around a quarter. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Privatization and liberalization have encouraged inward investment. the Slovak government is focused on making the country increasingly attractive place to conduct business. Fiscal consolidation will be a key priority of the government in 2010–11. low labor costs and all the benefits of EU membership. According to the 2010 Index of Economic Freedom (a product of the Wall Street Journal and the Heritage Foundation). In 2004. while the share of indirect taxes increased by a little under a fifth. with the corporate and personal income tax rates set at 19%. and the tax system has been simplified. However. Economic Progress on structural reforms since 1998 has been impressive.

and the availability of free media. Slovakia decided to withdraw all of its remaining troops from Iraq by the end of 2007 and instead.Political landscape Social The government of Slovakia committed itself to the implementation of the Lisbon strategy of 2004 by the approval of the strategic document national action plan for social inclusion. The country also has elaborate social measures which foster and preserve the cultural needs of disadvantaged social groups. The Slovak government’s foreign policy will be focused on maintaining positive relations with the EU. spending on education is likely to be reduced in 2011. along with freedom of expression. this could lead to strained relations with the EU. However. and control of corruption as indicators for 213 countries and territories over the period 1996–2009. With the change in the political guard. However. including Slovakia. Slovakia ranks high due to its quick adoption of Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Foreign and defense policies Mikulas Dzurinda’s center right administration placed EU and NATO entry at the top of its foreign policy agenda. the incumbent government would focus on supporting families. political stability and absence of violence. Voice and accountability measures the extent to which a country's citizens are able to participate in selecting their government. by allowing delays in mortgage payments. Hungary and Romania—which has the most substantial Hungarian minority community—reached an agreement on a compromise proposal. people would be given more opportunities to increase the value of their savings. including Slovakia. some reorientation in the foreign policy has been noticed recently. Performance Governance indicators The World Bank report on governance uses voice and accountability. government effectiveness. EU membership was achieved in May 2004. A row with Hungary erupted early in 2002 over a Hungarian proposal to extend certain rights to ethnic Hungarians living in neighboring countries. According to the prime minister. Prime Minister Iveta Radicova is expected to introduce measures to enhance social security. through an improved pension system. to increase protection for minority and disabled groups of the country. rule of law. remain. Relations with central and eastern European neighbors remain relatively good. Slovakia had refused to participate in the bail-out of Greece in 2010. a percentile rank of 0 puts it at the lowest rank and 100 corresponds to the highest rank. for example. To this end. Preparations for EU membership in particular were intense with significant economic and political reforms pushed through parliament to meet the EU’s exacting membership rules. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 13 . Slovakia is expected to maintain good relations with Russia due to its dependence on energy imports from the latter. particularly with respect to continued support for US forces in Iraq. Following the resounding “yes” vote in the 2003 referendum. differences between Hungary and the other affected countries. regulatory quality. For any country. freedom of association. In May 2010. The government also passed an anti-discrimination act in 2004. send more troops to Kosovo and Afghanistan. Slovakia had joined NATO two months earlier. Slovakia protested at Hungarian parliament's decision to allow ethnic Hungarians living abroad to apply for Hungarian citizenship. Daniel Kaufmann and Massimo Mastruzzi of the World Bank Institute and Aart Kraay of the World Bank Development Economics Research Group carried out the study. Slovakia ranked in the 73 percentile on the voice and accountability parameter in 2009.

Slovakia ranked in the 78. as well as the likelihood of crime and violence.2. Besides the above. Moreover. and consolidate the public finances.9 percentile on the rule of law parameter in 2009. Fiscal consolidation is the country’s most pressing problem. High ranking indicates efficient implementation of policies and regulations for the private sector.Political landscape democracy and liberal attitude towards the press. Slovakia is ranked higher than Poland. Building positive relations with the EU is also a key goal of the Slovak government in the near term. The incumbent government is expected to take measures to create jobs.2 percentile on the control of corruption parameter as of 2009. Slovakia is ranked higher than Poland. which has a percentile rank of 80. followed by tensions between Slovaks and ethnic-Hungarians. the government also needs to prevent clashes within and between the coalition parties. Slovakia is ranked lower than Poland. the quality of the civil services and the degree of its independence from political pressures. Control of corruption measures the extent to which public power is exercised for private gain. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 14 . Outlook The performance of the center-right ruling coalition government is contingent upon the outcome of their economic and social reforms. and the courts. support growth. and the credibility of the government's commitment to such policies. Government effectiveness measures the quality of public services. ethnic tensions are perceived as a major social and political problem in Slovakia.6 percentile. especially between Slovak Democratic and Christian UnionDemocratic Party (SDKU-DS) and the Christian Democratic Movement (KDH). the police. Slovakia is ranked much lower than Poland. The country is ranked in the 66. Political stability and absence of violence measures perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means. Rule of law measures the extent to which agents have confidence in and abide by the rules of society. Slovakia ranked in the 67. as well as the appropriation of the state by elite and private interests. which has a percentile rank of 71. including domestic violence and terrorism. Slovakia is ranked lower than its neighbor Poland. Regulatory quality measures the ability of the government to formulate and implement sound policies and regulations that permit and promote private sector development. which is ranked in the 71 percentile in terms of government effectiveness. Ethnic conflict could affect the country’s political landscape. Slovakia ranked in the 76.8 percentile on political stability and absence of violence in 2009. Slovakia is ranked slightly lower than Poland. which has a percentile rank of 68. which has a percentile rank of 80. Slovakia ranked in the 82. conflicts between the majority population and the Roma minority are the most severe. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.4 percentile on regulatory quality in 2009. which is ranked in the 78.9. the quality of policy formulation and implementation.7 percentile on government effectiveness in 2009.6 on the voice and accountability parameter. According to a social survey carried out by the Slovak Academy of Sciences (2009—10). and in particular the quality of contract enforcement. including both petty and grand forms of corruption.

However.6% in 1998 to nearly 19% in 2000. was carried through assiduously by the center-right administration that replaced it. and the tax system has been simplified (Slovakia has enthusiastically embraced the “flat tax” system).4% and moderated to 6.Economic landscape ECONOMIC LANDSCAPE Summary The Slovak economy has been hamstrung by macroeconomic instability since its independence in 1993. Slovakia appears as an increasingly attractive place to conduct business. • The period from 2002 to 2004 saw a strong growth performance in the nation. the lower growth trajectory in 1999 led to a substantial increase in unemployment. Progress on structural reforms since 1998 has been impressive. On the whole. Evolution The following are some of the key events in the economic history of Slovakia: • Slovakia’s economic performance since independence has been somewhat mixed. • Despite the slowdown in the European economies in early 2000. and also exhibited a high degree of volatility (although much of this was due to massive FDI inflows). the economy suffered a degree of macroeconomic volatility. Relatively high fiscal deficits have helped to increase deficits on the external current account. expanding by 5. Real GDP growth in 2002 and 2003 was above 4%. from a high rate of 12.7%. In 2007. Slovakia's economic growth exceeded expectations. which has not been fully tamed since the fall of Meciar’s economically populist regime in 1998. The external current account remained stubbornly high. the country expanded by 10. • This precipitated a sharp currency correction in 1998. However. with one of the region’s lowest tax burdens. Despite this. Privatization and liberalization have encouraged inward investment. macroeconomic volatility is still a concern and unemployment remains quite high. The government also needs to reduce its budget gap significantly in 2010–11. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 15 . the GDP grew at a CAGR of around 1. which stalled under Meciar’s populist administration in the mid-1990s. The major source of this flux was a persistent tendency towards fiscal excess. • The reform process. • However.8% over 1990–2005. low labor costs and all the benefits of EU membership. which fed into renewed inflationary pressure in the following two years. rising to 5. • Slovakia entered into a deep recession in 2009 with the economy contracting by 4. although the twin deficits on the external and fiscal accounts remained problematic.4% in 2008. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. The fiscal authorities struggled to achieve stability.2% in 2004 on the back of strong investment demand and continued double-digit export growth. • The fiscal and monetary response to the 1998 crisis helped to correct the external imbalance by suppressing import growth.5% on an average during the period 2001–06.

The supreme governing body of NBS is the bank board. The bank board consists of eleven members. The NBS officially joined the Euro System in January 2009. The board members are appointed for a five year term. The NBS together with other central banks and the European Central Bank participates in activities covering stable monetary development and economic growth in the euro area. consisting of a governor. as well as to the safe and sound functioning of the financial market. with several sub-committees supervising different functions of the financial system.Economic landscape Figure 5: Evolution of GDP growth in Slovakia. 1991–2009 15 10 5 Real GDP Growth rate (%) 0 1991 -5 1993 1995 1997 1999 2001 2003 2005 2007 2008 2009 -10 -15 -20 Year Source: Datamonitor DAT AMONITOR Structure and policies Financial system Overview The Slovakian financial system is totally controlled by National Bank of Slovakia (NBS). This brief is a licensed product and is not to be photocopied Published 12/2010 Page 16 . Based Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. two vice-governors and eight other members. Financial authorities/regulators National Bank of Slovakia (NBS) The NBS contributes to the financial system stability as a whole. The NBS is responsible for the functioning and regulation.

75 billion. The total insurance assets account for around 8% of the financial sector assets of the country. Slovakia's new centre-right government outlined a package of austerity measures worth E1. scheduled to take effect in 2011. the government plans for a temporary increase in the value-added tax. the 20% rate will Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.2 billion.0 3.0 2.0 6.0 2004 2005 2006 Year Source: Datamonitor DAT AMONITOR 2007 2008 2009 Insurance The insurance industry is regulated by NBS and the main players are insurance companies licensed in the Slovak Republic. however. insurance companies from other member state of the European Economic Area. In 2008. the market capitalization came down to $5 billion. The stock exchange was established in 1991. Figure 6: Market capitalization of the BSSE. it came down to around $5. The membership committee. there were 23 domestic insurance companies and 418 foreign insurance companies. In an attempt to increase revenues. At the end of 2009. include spending cuts worth E980 million. securities listing committee and trading committee are three permanent advisory bodies of the BSSE. Key policies In September 2010.8 billion.0 Value ($ billion) 4. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 17 .0 5. and other members are appointed by the governor. and insurance and reinsurance brokers. 2008.0 0. from 19% to 20%. the market capitalization was more than $6.Economic landscape on the recommendation of national council. the president appoints the governor and vice-governors.0 1. In 2007. Bratislava Stock Exchange (BSSE) The BSSE is the chief stock exchange of Slovakia. As of December 31. The measures. 2004–09 7.

The growth rate fell from 10.0 9.0 5.0 -3. with the real GDP growth averaging around 6. the economy contracted by 4. while certain exemptions for energy products will be removed.7% as a result of the global economic crisis. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 18 . Figure 7: GDP and GDP growth rate of Slovakia (constant prices).0 Growth rate (%) $ billion 20 3. Performance GDP and growth rate Overview Economic growth has remained relatively robust during 2001–08.2%.0 11. the GDP climbed to 4.0 15 1.0 2009 2010 2011 2012 2013 Source: Datamonitor DAT AMONITOR GDP composition by sector The services sector contributes nearly 63% to GDP in Slovakia. By the end of 2009.6% is contributed by the agricultural sector.4% in 2008.0 -5. 2002–13 40 35 30 25 13.0 10 5 0 2002 2003 2004 2005 2006 2007 2008 Year GDP Real GDP growth rate -1. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.7% in the first half of 2010. This is followed by the industrial sector. which contributes 34. According to government estimates.0 7. Excise taxes will be raised on beer and cigarettes.Economic landscape remain in effect until the fiscal deficit falls below 3% of GDP.4% to GDP and a minuscule share of around 2. The government also indicated that it will introduce a cut in publicsector wages in 2011.4% in 2007 to 6.

and forest products. 34. sugar beets. 63. the agricultural output in Slovakia grew from E1.7 billion ($73.91 billion ($83. it came down to around E1. hops. pigs.6 million) in 2002 to E1.4% Services. poultry. potatoes.6 million) in 2008.4 million) in 2009. 2009 Agriculture.Economic landscape Figure 8: Sector specific GDP in Slovakia. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 19 . cattle. However. 2. The agricultural sector contracted by 2. According to Datamonitor estimates.86 billion ($81.45% in 2009. fruit.6% Industry.0% Source: Datamonitor DAT AMONITOR Agriculture The important agricultural products of Slovakia are grains.

paper and printing.Economic landscape Figure 9: Agricultural output in Slovakia. transport vehicles.4 billion ($1 billion) in 2008.0 2.6 billion ($0. metal and metal products. electricity. oil. the industrial sector grew from an output level of E11. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 20 . nuclear fuel.0 1.0 0.00 15. chemicals and manmade fibers.0 0.50 E billion 10. coke. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.98 billion) in 2009. electrical and optical apparatus are some of the major industries.3 billion ($0. gas. According to Datamonitor estimates. 2002–09 2.50 0. machinery.50 20. The industrial output came down to E22. Within the industrial sector.0 Growth rate (%) 1.4% of GDP.0 2007 2008 2009 Source: Datamonitor Note: Sectoral output given in local currency due to foreign exchange fluctuations and its impact on the growth figures Industry DAT AMONITOR The industrial sector is the second major contributor to GDP.49 billion) in 2002 to E23. textiles. accounting for 34.00 5. food and beverages.00 2002 2003 2004 2005 2006 Year Agriculture output Growth rate -5. earthenware and ceramics.

3 billion ($1.5 billion ($1.0 E billion 10.8 billion) in 2009.0 0. 2002–09 25.Economic landscape Figure 10: Industrial output in Slovakia. The major sub-sector of the services industry is financial and insurance services.86 billion) in 2008. According to Datamonitor estimates. The services output also reduced to E41.0 15.0 10.0 20.0 5.0 5.8 billion ($1 billion) in 2002 to E42.0 2007 2008 2009 Source: Datamonitor Note: Sectoral output given in local currency due to foreign exchange fluctuations and its impact on the growth figures DAT AMONITOR Services The services sector dominates the economy and contributes around 63% to the country's GDP.0 Growth rate (%) 0.0 15. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 21 . the service sector output rose from around E23.0 20.0 2002 2003 2004 2005 2006 Year Industry output Growth rate -5.0 25. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.

0 10.0 15.9% of its GDP as the former government increased spending substantially amid the global economic crisis.1 billion.0 -4. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 22 .0 5.0 0.0 -2.0 10.0 E billion 25.5% of GDP. The government is making efforts to reduce the budget gap in 2011.0 40.0 2007 2008 2009 Growth rate (%) Source: Datamonitor Note: Sectoral output given in local currency due to foreign exchange fluctuations and its impact on the growth figures DAT AMONITOR Fiscal situation Fiscal deficit/surplus situation The fiscal deficit narrowed somewhat from 6% of GDP in 2001 to a little under 4% of GDP in 2004. the deficit came down to around 3. the government debt is estimated at 35. reflecting the authorities’ success in containing expenditure growth and the effect of buoyant GDP growth on revenue. In 2005. The budget deficit in 2008 was around $2. Despite the wider budget deficit. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.0 2.0 20.0 4.1% of GDP and remained at 3% of GDP in 2006. Slovakia's budget deficit for 2009 reached 7. 2002–09 45.4% of GDP in 2009. amounting to 4.0 12.0 35. For 2010.0 6.0 0.Economic landscape Figure 11: Services output in Slovakia.5% of the projected GDP.0 2002 2003 2004 2005 2006 Year Services output Growth rate 14. According to the most recent figures by the Eurostat.0 8.0 30. the incumbent government aims to reduce the fiscal deficit to 5.

current-transfers accounts and the recovery of foreign direct investment (FDI) in early 2010. Italy (6. Poland (7. Germany was Slovakia’s most important export partner.9% of the total exports in 2009. and Poland (4%). down from E783 million in the same period in 2009. Czech Republic accounted for 13% of total exports in 2009.7%). down from $72.Economic landscape Current account The Slovak current account balance has been in the negative since 2001. Exports to Poland and Hungary have actually grown slightly. now have only a 1% share.7 billion in 2009. the reduction was driven by improvements on the foreign trade. accounting for 19. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Other key import partners include the Czech Republic (which accounted for 12. According to data from the National Bank of Slovakia (NBS). Foreign trade Slovakia’s trade orientation has shifted markedly over the course of the 1990s. Hungary (5. China (5.3%). and the UK (4.3% of total imports in 2009). from a heavy reliance on trade with other eastern bloc countries (particularly the Czech Republic) towards integration with the EU market. The total value of imports reached $53.3%). South Korea (6.Slovakia's current-account deficit stood at E408 million ($549 million) during the first five months of 2010. The total value of exports reached $55. the EU market’s share has grown from 28% in 1993 to around 50% in 2007.5%).6 billion in 2008. Austria (5. Although the deficit was around $1.8% of the total imports. Russia (9%). services. France (7. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 23 .9%). which accounted for some 5% of total exports in 1993. it began to widen to larger amounts in consecutive years.7%) are the country’s other key export partners. The current account deficit was more than $4 billion in 2005 and increased to more than $6. Exports to Russia. as a percentage of total exports since 1993.8%).3 billion in 2009. Exports to the EU as a percentage of total exports surged from less than 30% in 1993 to more than 60% in 2009.4 billion in 2008. On the imports side.1%). down from $73.8 billion at the end of 2009. The current account deficit came down to $2. Germany accounts for 16. down from more than 40% in 1993.75 billion in 2001.6 billion in 2008.8%). Hungary (6.

1 2006 2007 2008 2009 Source: Datamonitor External debt The Slovakian government has always been one of the largely funded among the EU members. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Slovakia's external debt was around $44 billion in 2007 and it rose to around $52.9 billion in 2008. the total value of FDI equity capital plus reinvested earnings was $14. 2002–09 180 162.Economic landscape Figure 12: Slovakia’s trade position. 2009.9 125.3 billion as of December 31. At the end of 2005. The changes came after 2000. the inflow of FDI in Slovakia was under 1. However. However.7 60 40 20 0 2002 2003 2004 2005 Year Exports Imports Total trade DAT AMONITOR 131. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 24 . International investment position Foreign investments Until 1998. equivalent to around 31% of GDP. the exclusive FDI was around $2.5 billion as of December 31. when there were large privatization receipts in telecommunications (2000) and the electricity supply networks (2002). a rise from $45. most FDI inflows were into the manufacturing sector and to a lesser extent into the financial sector where majority of banks are now foreign-owned.5 billion.6 36.7% of GDP annually.4 billion in 2005 and this increased to around $3.6 160 140 120 $ billion 100 80 64.7 74.4 billion in 2008. The stock of FDI in Slovakia reached $50.9 50.1 96.5 billion by end of 2008. The external debt rose to more than $69. 2009.

Economic landscape Monetary situation Overview The NBS uses monetary policy to maintain price stability as defined in the monetary policy.00 40.00 7.00 80.00 100.00 Source: Datamonitor DAT AMONITOR Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.00 Consumer price index 120. Datamonitor forecasts suggest that inflation is expected to remain under 3% during 2010–13.00 8.00 60.00 Inflation (%) 6. The NBS follows the Eurosystem and sets inflation and interest rate targets in line with the European Central Bank.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year Consumer price index Inflation 10. Inflation further came down to 1. Figure 13: Consumer price index and CPI-based inflation in Slovakia.00 0.9% in 2009.9% in 2008.00 140.00 9. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 25 . the level of inflation reduced considerably and reached around 3.00 20.00 5. The NBS adopts a direct inflation targeting strategy to counter the effects of inflation.00 0.00 2. However. Key monetary indicators CPI inflation The inflation in Slovakia was over 7% high during 2003 and 2004.00 160.00 4.00 1.00 3. 2002–13 180.

Employment The fall of the communist regime provoked a series of changes in both the size and composition of the labor force in Slovakia. The services sector accounted for around 69.3%.9 million) at the end of September 2009. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 26 . with the rate for the main refinancing operations standing at 1%. The unemployment rate reached 12.5%. According to Datamonitor estimates. Unemployment peaked in 2004 at 18%. There were 15 banks with foreign capital and three without foreign capital. According to NBS.56 million ($377. the ECB left the key interest rates unchanged. The adoption of the single European currency had an impact on the banks’ economic performance. and Banska Bystrica respectively.1% as of 2009. the unemployment rate is expected to reach 15% in 2010. the marginal lending rate at 1. Zilina. Banking sector The banking sector in the Slovak Republic as December 31. which reflected in a shortfall in revenues from foreign exchange transactions. which was a year on year decrease by 52.Economic landscape Interest rate According to the NBS’s most recent monthly bulletin (September 2010).6% recorded in 2008. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.25%. Of 18 domestic institutions. The rate of unemployment came down in 2008 but rose again in 2009. 15 banks maintained their headquarters in Bratislava. compared to 9. industry accounted for 27% and agriculture accounted for a mere 3. profit of Slovakia’s banking sector represented E259.4% of the labor force as of December 2009. one bank in Kosice.75% and the deposit rate at 0. 2008 consisted of 27 commercial banks including 9 branches of foreign banks.

due in part to its status as an EU member. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 27 . Slovakia entered its first recession since independence contracting by 4. The incumbent government plans to implement austerity measures in 2011 in order to consolidate public finances.Economic landscape Figure 14: Unemployment in Slovakia. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Being an exportdependent economy. However. 2002–13 600 20 18 500 Number of unemployed (thousands) 16 Rate of unemployment (%) 400 14 12 300 10 8 200 6 4 2 100 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year Total unemployment Rate of unemployment (%) 0 Source: Datamonitor DAT AMONITOR Outlook Slovakia enjoyed strong economic growth until 2008. As a result of these factors.7% in 2009. This is largely attributed to the slash in demand from Germany. positive results in the first half of 2010 suggest that Slovakia’s economy will bounce back posting an overall GDP growth rate of 3. Czech Republic and France. the recent global economic crisis impacted Slovakia’s economy adversely. The country’s output in 2009 was also impacted by a reduction in domestic demand and private consumption. the country’s chief trading partners.5% in 2010.

the birth rate in Slovakia was around 10. Slovakia has been consistent in implementing social welfare policies. disability. This replaced the income based on salary during old age.6 per 1. Structure and policies Demographic composition Age and gender-wise composition The registered population of Slovakia was 5. social inclusion and mandatory insurance during 1990s.05 males per female.Social landscape SOCIAL LANDSCAPE Summary The Slovak Republic. During the 1950s. The population density of the country is 111 persons per square kilometer. The Slovak Republic has committed itself to the fulfillment of the Lisbon strategy of 2004 by the approval of the strategic document–national action plan for social inclusion. The communist ideology was based on refusal of capitalism and market economy. full (officially 100%) employment became the base of the social policy. “state ownership” substituted the private property. about 12. after its formation in 1993. the government-funded system of social security replaced the social insurance system. with stringent laws and social control. which created the framework for changes in the system of social affairs. Child allowance was introduced in Czechoslovakia after the World War II. being a part of communist regime. national insurance was introduced in order to unify several types of social insurance existing already in pre-war Czechoslovakia. made significant efforts to enhance the standard of living and social welfare in the country. More than 71% of the population is between the ages of 15–64. Four different ministries monitor different sectors within the social department.000 population. The Slovak system improvised the social policy more towards attainment of social security. economic and social changes. with 1. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 28 . Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. planned economy substituted free business and competition. Evolution Historically. The sex ratio is even. As per 2010 estimates. In 1948. which indicates that the country has a high percentage of working population. Within the planned economy framework. However. and maternity. Under the communist regime. sick leave.5% of the population is aged 65 and above. The fall of communism caused large political.46 million as of 2009.

15 0.09 0.09 0.07 0.19 0. around 68.21 0.20 0.19 0.19 0.20 0. about 10.15 0.23 0.05 DAT AMONITOR Source: Datamonitor Religious composition According to the 2001 census.14 0. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 29 .14 0.14 0.14 0.24 0.23 0.05 0. Around 3.10 0.19 0.12 0.22 0.8% Protestant and around 4.11 0.2% of people follow various other religions and 13% do not follow any religion.16 0.19 0.Social landscape Table 3: Mid-year population by age (millions) in 2009 Mid-year population by age Female Male 0–4 5–9 10–14 15–19 20–24 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70–74 75–79 80+ 0.19 0.20 0.17 0.21 0.9% of the population follows Roman Catholic Church.1% Greek Catholic.19 0.23 0.12 0.

beginning at age six. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 30 . these institutes have operated as a network of state health institutes with their management. Healthcare Healthcare services Under the socialist regime. After age 15. Since the formulation health protection act in 1995. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. The higher education system consists of graduation studies and professional education. The ministry of education lays out laws and guidelines to regulate the system of education in the country. The stations were transformed into institutes of hygiene and epidemiology (primary healthcare) in 1992.6%. the country had a health system consisting of hygiene stations spread across the country. the students have a choice of either going to secondary specialized schools or secondary vocational schools. with a four-year course.Social landscape Figure 15: Major religions in Slovakia Others 3% Greek Catholic 4% None 13% Protestant 11% Roman Catholic 69% Source: Datamonitor DAT AMONITOR Education System of education The population in Slovakia is well educated with a literacy rate of 99. Education in Slovakia is compulsory for the first 10 years of schooling.

As a result. The country also has a well-governed pension system in place.060. polyclinics and specialized therapeutic institutes) remained under government control. as per which all employers and employees are required to make mandatory amounts of contributions for national insurance fund. the remaining 31% of health expenditure was funded mainly through direct out-of-pocket payments.738 in 2008 (adjusted for purchasing power parity).Social landscape In 2004. The country has a mandatory social and health insurance policy. • • a defined contribution (DC) mandatory savings system. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. the management of inpatient facilities remained centralized. the ministry of health established a body called as the office of public health of the Slovak Republic. old-age and survivors' benefits convention. The country reformed its national pension system in 2004 and 2005. 69 control reference institutions (such as the state institute for drug control. However. Most recently. 161 health care facilities (all hospitals. The healthcare expenditure rose from $3 billion in 2004 to $6. However. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 31 .8 billion in 2009. social affairs and family formulates and implements various social welfare programs in the country along with other government machinery. compared with an OECD average of $3. In comparison. national health promotion centre and institute for health information and statistics) remained under the direct management of the ministry of health. to which 9% of insurable earnings are transferred.2%). the US spends the most on health as a share of its economy (with 16% of its GDP allocated to health in 2008). The previous pension system was changed to a three-tier system consisting of: • a defined benefit (DB) first tier that retained only 50% of the former total old-age pension contribution of 18% of insurable earnings. Performance Healthcare According to Datamonitor estimates. In Slovakia. Slovakia has a total health spending per capita. The healthcare system went through decentralization during 1990s. a voluntary savings based third tier with tax deductible contributions. which carries out all the healthcare activities in respective regions.7%). Slovakia and Israel signed an agreement as per which citizens working in each other's countries will remain entitled to social-security benefits after returning home.5% of GDP in Slovakia in 2009. Social welfare Social welfare policies The ministry of labor. with spending of $1. around 69% of health spending was funded by public sources in 2008. The country’s social system has seen significant improvement after joining the EU. Furthermore. followed by France (11. Furthermore. this is below the OECD average of 9%. such as ministry of health. in June 2010. Slovakia has not only ratified the social security (minimum standards) convention of the EU but also ratified the invalidity. ministry of education and ministry of culture. This body has a network of 36 more offices across the country. and Switzerland (10. healthcare spending accounted for 7.

Iveta Radicova. health insurance.9% and European average of more than 6%. Slovakia was put at 0.0 Source: Datamonitor Income distribution Standard of living Slovakia has been successful in limiting disparities of income and wealth and restricting poverty in the country.0 2.0 5.0 8.26 in 2008 (latest year available). who was sworn in as prime Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.0 8. 2002–13 10.0 9.0 4. On the Gini coefficient. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 32 . it is still far away from OECD average of 8. which ranges from 0 (perfect equality) to 1 (perfect inequality).0 1. Outlook Prime Minister Iveta Radicova claimed that the overall social protection in Slovakia deteriorated under the Smer-SD-led government.0 3.0 7. The share of education expenditure as a percentage of GDP rose to more than 3. Education The education expenditure in the country has been low at around 3% of GDP during the period 2003–06.0 6. Another factor is the country’s provisions with respect to social protection.5% in 2008. A key factor contributing to Slovakia’s containment of inequality has been the provision of pension schemes.0 3.0 4. unemployment insurance and family welfare.0 0. poverty and regional disparity.Social landscape Figure 16: Healthcare expenditure in Slovakia.0 0.0 7.0 Percentage (%) $ billion 6.0 5.0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year Healthcare expenditure Healthcare expenditure as % of GDP DAT AMONITOR 1. with a rise in unemployment. However.0 2.

people would be given more opportunities to increase the value of their savings. for example. the incumbent government has plans to reduce spending for higher education and science in 2011. Radicova announced that the government would focus on supporting families. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Should this plan be implemented. by allowing delays in mortgage payments. However. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 33 . through an improved pension system.6% and so will the capital expenditures. According to the draft state budget for 2011. announced that she would implement various measures to correct the situation.Social landscape minister in July 2010. current expenditures will be reduced by 1. According to the prime minister. Slovakia will be among those EU countries which spend the least on education. in a bid to reduce the budget deficit.

With the establishment of Slovak research and development agency (SRDA) in 2005. The assembly. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Slovakia registered 16 patents with the US patent and trademark office. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 34 .Technological landscape TECHNOLOGICAL LANDSCAPE Summary The science and technological developments in Slovakia have been slow. In 1844. The SRDA is responsible for promoting research and development in all research fields. compared to 12 patents registered in 2008. the nation-wide cultural association. There are 51 scientific and scholarly associations. Research and development The ministry for education and SRDA are primarily responsible for R&D and innovation in Slovakia. The SRDA is the instrument for distribution of public finances for research and development on the competitive basis in Slovakia. The SAS is a key organization which promotes R&D in the country. Tatrin. which transformed into a pioneering institution nurturing scientific research. the parliament of the Slovakia instituted Slovak academy of sciences and arts (SAVU). the first scientific step was taken with the establishment of Slovak Academy of Sciences and Arts in 1942. In 1989. the government is making efforts to attract investment into the ICT sector and encourage corporate business investments into R&D sector. R&D funding was streamlined in the country. under the name Slovak university of technology (STU) in Bratislava. the first scientific university was established in 1937. On an academic front. the STU is one of the most well established scientific institutions in the country. During the post-World War II period. Evolution The first step towards scientific development in Slovakia was made in 1792. The IPO was formed after a National Council Act on Patents passed in 1992. which operate in accordance with the law on civic associations. The global economic crisis did not have a major impact on the country’s Slovakia's telecom sector. 19. the SAVU was changed to Slovak Academy of Sciences (SAS).000 students have graduated. and the presidium are the academy’s self-governing bodies. Structure and policies Intellectual property The industrial property office of the Slovak Republic is a central state administration body operating in the field of industrial property protection. significant changes were made in SAS. Although R&D expenditure in the country is low compared to other EU nations. of which 48 are budgetary and 21 are subsidized.000 students study at the STU every year. It consists of 69 organizations. societies and unions affiliated with the SAS. On an average. was instituted. The IPO carries out its activity as a specialized government body having sole authority over the territory of Slovakia in ensuring the protection of industrial property. under the Ludovit Stur. more than 115. In 2009. the scientific council. However. since then. Since its foundation in 1937. The Internet sector is set for growth as the penetration rate is still at 52%. In 1942. Its establishment was legally grounded in an act passed by the Slovak national council in 1953. far–reaching transformations have enabled the academy to become similar to counterpart organizations of science and research in advanced countries abroad. the Slovak learned society (Slovenske ucene tovarisstvo) was established. Among the universities. based on a plan issued by a group of patriotic philologists.

Figure 17: Growth of fixed and mobile phones in Slovakia. Around 52% of the population subscribed to the Internet as of 2009. there were 106. According to Datamonitor estimates. compared to 5. Since then. In comparison. there were 2. compared to 2. but access has increased rapidly since the early 2000. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor.77 million users in 2008.5 mobile phones per 100 people in 2009. broadband and internet After the split with Czech Republic in 1993.8 million mobile phone subscribers in 2009. There were 5. According to Datamonitor estimates. particularly in the area of information and communication technology (ICT). the government adopted deregulation and privatization policies for more than a decade. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 35 . the fixed line penetration rate stood at 20% in 2009.Technological landscape Performance Opportunity sectors Telecommunications. the country’s telecommunications sector has grown rapidly. Datamonitor forecasts suggest that the Internet market is expected to reach more than 30 million users by 2012.7 million subscribers in 2008. These figures indicate that the Internet sector shows promise for growth. The mobile phone users in Slovakia grew by more than 24% in 2007.9 million Internet users in 2009. 2002–13 35 25 Growth rate (%) 15 5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -5 -15 Year Mobile phone growth Source: Datamonitor Fixed line growth DAT AMONITOR Internet penetration is weak by European standards.

research programs of the Slovak government (there were ten such programs until 2008 which were led by research councils).00 Growth rate (%) 2 120. 2002–13 3.5 240. the country allocated around 0.5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year Number of users Growth rate 40. In terms of these key criteria. There are nine industrial parks in Slovakia. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 36 .46% of GDP for R&D.00 3 Number of Internet users (millions) 2. A policy on industrial parks was first formulated in a 2001 law on support to the establishment of industrial parks. As of June 2010.8% of its GDP in R&D by 2015.5 200. Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. during 2004–09. There are three types of financing R&D from public resources in Slovakia. Moreover.5 80.00 0. and through specific order by the related ministry.00 1 0. Research and development R&D expenditure R&D is monitored by the ministry of education but has limited funds for financing research.00 Source: Datamonitor DAT AMONITOR IT sector A growing trend in Internet usage. Slovakia is in the top ten European performers in IT. technology parks and R&D centers’ scheme” which supports clustering and cooperation for innovation.Technological landscape Figure 18: Internet users in Slovakia.00 160. the country has one of the lowest allocations for R&D among the EU countries (according to a report submitted by the ministry of education for the period 2003–08). As of 2008. with the largest ones in Bratislava and Martin (specialized in production of car components) and Kosice regions (electronic components).00 1. However. the Slovak government set itself the goal of investing 1. Research is funded through the SRDA. the ministry of economy introduced the “business incubators. a skilled workforce and a growing ICT sector are promising signs of progress.

2% of its GDP on R&D and innovation in 2009. This figure has grown significantly in recent years but is still low compared to R&D expenditure in other European countries. In June 2010. To tackle these issues. Slovakia spent around 1. the government launched an E1. the Slovak government set itself the goal of investing 1. Meanwhile.8% of its GDP in R&D by 2015. Therefore. for example. According to the European Innovation Scoreboard for 2009. the lack of basic infrastructure and the disparity between the capital Bratislava and other regions in the country. This brief is a licensed product and is not to be photocopied Published 12/2010 Page 37 . Slovakia: Country Analysis Report–In-depth PEST Insights © Datamonitor. Slovakia’s former Prime Minister Robert Fico expressed that the 3% GDP target for R&D set under the “Europe 2020” plan was almost impossible to achieve. Slovakia’s innovation performance is well below the EU27 average but the rate of improvement is above that of the EU27. the ICT sector is expected to benefit from government initiatives aimed at attracting more investment.APPENDIX Outlook According to government estimates. A significant amount of funds from the EU would be allocated towards this program.2 billion-special operational program dedicated to meeting its R&D target. The government has identified various problems related to R&D in the country.

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