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Macroeconomic overview


Slovak currency
Slovakia adopted the euro on 1 January 2009 as 
the first country in the CEE region and thus became 
the 16th member state of the Euro Area. It was thanks
to the sustainable development and good inflation 
forecasts. The official exchange rate was 30.1260 SKK/EUR
Slovakia has fully fulfilled all required criteria for adopting 
the euro currency, known as Maastricht criteria. Slovak koruna 
was under detail scope of the European observers since 28 
November 2005. The most observed criteria for the term 
of two years were: 1.) Inflation not higher than 1.5 % of the average 
of three lowest inflation member states of the EU and also sustainable 
low inflation outlook 2.) Government deficit to gross domestic 
product (GDP) could not exceed 3% and government debt to GDP could 
not exceed 60% at the end of the preceding fiscal year 3.) The nominal 
long-term interest rate could not be more than 2 % higher than in the 
three lowest inflation member statesMembership in the Euro Area 
reduces the currency exchange risks and tightens fiscal discipline of 
the adopting countries, which results in more chances for stable economies. 
In the long run this will be beneficial for both businesses active in those 
countries and Slovakia. 
Ratings
Slovakia is generally recognized as an open market economy 
whose ability and willingness to pay itsliabilities puts it, according 
to prestigious rating agencies, into the 'Investment' level, and this 
level isexpected to increase. Based on ratings of Standard and Poor’s, 
a credit rating agency, Slovakia has become a leader of the Central 
European region.Despite the financial crisis, which caused some countries’ 
ratings to go down, Slovakia maintains its positive momentum and has 
the best ratings among these countries. 
Our ratings from Moody’s and Fitchhave been upgraded in July 2008 
and Standard and Poor’s last upgrade was in November 2008, well 
intothe financial crisis. OECD’s country credit risk ratios were 
reviewed in January 2009 – Slovakia was the only country whose 
rating improved during this review. The risk was lowered to 0. 
During the latest OECD’s country credit risk review in April 2009, Slovakia 
maintained its risk to be 0. This is a great advantage for foreign investors, as 
it means that Slovakia, Slovak banks and companiesare in a strong financial 
position and are able and willing to repay their debts. In spite of the 
currentsituation, Slovakia is one of the few countries to maintain a 
stable/positive outlook. Our ratings are notexpected to change in the near future. 
Inflation
Towards 2002 Slovakia was able to continuously lower 
its inflation. One of the reasons was that in the EU pre-accession 
period, the development of the inflation in the transition 
economies has been the subject of increased attention. 
On one hand, there was the goal of bringing the rate 
of inflation close to that in the EU (EMU) countries, and 
on the other hand there was recognition that the transition 
processes and the “catching up” may push inflation up to 
higher levels. Slovakia experienced sharp increase 
of inflation in 2003. The inflation level of 8.5% represented 
theresult of price deregulations (gas, electricity, etc.) and 
introduction of flat tax rate of 19% in 2004. Towards 2008, 
Slovakia lowered its inflation and was able to keep the 
comparable level with the average of Euro Area countries.
The inflation level was also one of the Maastricht criteria, 
which Slovakia had to fulfil for its entry to the EuroArea: 
the inflation could not be higher than 1.5 % of the average 
of three lowest inflation member states of the EU and Slovakia 
also had to have sustainable low inflation outlook. Keeping 
the inflation low is also one of the important tasks of the Euro Area member states. 
Unemployment
The unemployment rate in Slovakia has been 10 percent 
or higher since the end of Communist rule. The service 
sector, which has developed very quickly since 1989, 
employs approximately 62.6 percent of the labour force. 
About 33.7 percent works in manufacturing and about 3.7 
percent is employed in agriculture. Labour unions are not as 
important as they were during the Communist period, 
although considerable numbers of workers and employees 
continue to belong to unions because of the benefits
they provide. Foreign investors have found that Slovaks
represent a top-quality labour force that is both efficient and 
productive. They have had no problem finding skilled engineers 
and top managers thanks to an outstanding higher education 
system. The standard of education in primary schools is 
considered to be the highest in Central Europe. Total 
unemployment rate, which is calculated according to 
the labour force sample survey carried out by the Statistical Office 
of Slovak Republic and the registered rate of unemployment, 
which is calculated according to the disposable number of 
unemployed people at the Labour Offices have been since 2002 
on steady decline. This trend is thanks to the well developing 
economy and attractiveness of Slovakia for foreign investors. 
The trend of steady decline might be ceased by the global economic 
crisis. However, that just means that more of skilled labour force will be to the investor’s disposal.  
Employment growth
Foreign investors have found out that Slovaks represent a top-quality 
labour force (of more than 2.1 million), efficient and productive. 
It is thanks to the Slovaks´ outstanding work attitude and excellent 
education system. Foreign companies frequently praise the motivation 
and abilities of Slovak workers who also possess good language and 
computer skills. Slovakia reaches one of the highest shares of workforce 
with the secondary or higher education and one of the highest shares of 
the university-educated workforce among all the European countries. 
Furthermore, the share of people with a university education is on the rise.
Slovakia is very interesting investment location especially when comparing 
average salaries in the CEE Region (or Western Europe) or total labour costs and labour productivity. 
Average salaries
Average monthly salary in Slovakia is continuously rising because of high 
economic development of Slovakia, rising living standard and high foreign 
direct investment volume in Slovakia. In 2008, the average gross salary was 
723 EUR per month, excl. obligatory social security contributions.The minimum 
monthly salary in 2008 was 240 EUR. The minimum monthly salary has been 
raised to295.50 EUR since 1. 1. 2009. 
GDP growth at constant prices
After its so-called ‘velvet divorce’ with the Czech Republic in the beginning 
of the 1990s, Slovakia was often referred to as a country with little chance for 
strong economic development. This was attributed to the fact that during the 
existence of Czechoslovakia, a majority of the modern enterprises were located 
in the present day Czech Republic. However, the Slovaks have clearly proven 
otherwise, sustaining strong economic development. Slovakia’s GDP was 
continuously rising and became much higher than the GDP growth in the 
EU15. In 2007 Slovakia reached with its GDP growth of 10.4% the highest 
GDP growth in the EU27. In 2008 Slovakia for the first time from 1999 
experienced decrease of the GDP growth due to the global economic crises. 
Despite the decrease, Slovakia had app. 9-times higher GDP growth than 
EU15 and the second highest GDP growth in the EU27. The only country 
with the higher GDP growth was Romania, which GDP growth was higher 
only slightly – by 0.7%. It is important to note that GDP growth in recent 
years was substantially affected by strong foreign demand. Currently, 
domestic demand and investments also play a significant role. Therefore, 
growth in Slovakia can be considered to be sustainable.


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