A strategic position and wealth that does not benefit everyone
Since its integration into the European Union in 2004, Slovakia's economic situation has improved significantly. Overall, its economy is in the green, with sustained and steady GDP growth from 2.4% in 2014 to 4.11% in 2018. The unemployment curve has also reversed from 10.8% in 2015 to 5% in 2019.
The country benefits from a sound financial system and a favourable geographical location at the crossroads of Central Europe. It offers a quality production platform with a still cheap and skilled workforce for the European automotive and electronics industries. After years of budgetary austerity, the current government has taken a number of measures: raising the gross minimum wage (from €380 in 2015 to €520 in 2019), increasing social benefits, free rail transport for pensioners and holiday vouchers. Nevertheless, the country remains vulnerable to external shocks and its good growth, mainly linked to its exports, will evolve in proportion to the economic dynamism of its European partners.
It is also useful to take a closer look at these data, as there are major inequalities between the Bratislava region in the west, the fifth richest area in the European Union, and the disadvantaged regions in the centre and east of the country, which the European funds are struggling to reduce. The inhabitants of these regions, victims of a real European disenchantment, feel on the fringes of Western Europe and its development. Their reality is far away and different from that of Western Slovakia. Not everyone benefits from the economic boom, a large part of the Roma population in the East is marginalised, as are the Magyar-speaking regions in the South.A qualified population
One of Slovakia's strengths is that 2.7 million, or half of its total population, is highly qualified, a boon for foreign investors, especially in the automotive sector. Today, Slovakia's strong industrial tradition, low taxation, still cheap and skilled labour, a rapidly developing infrastructure boosted by an influx of EU funds and enviable growth make it a favourite destination for trade, industrial cooperation and foreign investment as it catches up. The automotive sector is taking advantage of these favourable characteristics to set up numerous production lines in Slovakia. The establishment of Volkswagen as early as 1992 created a certain amount of emulation among other foreign investors: Sony, Lucus, Johnston Controls, Yazaki, Peugeot, Hyundai/Kia, Jaguar Land Rover. With its 5.4 million inhabitants, Slovakia is the world's largest producer of cars per capita. The automotive industry now accounts for 44% of the wealth produced.
Besides cars, other important sectors are heavy industry, iron and steel (metals and metal products), energy (electricity, gas, coal, oil, nuclear), textiles, IT development, electrical and optical appliances, rubber products, paper and printing, ceramics, but most of them are still in a restructuring phase. The contribution of the industrial sector to GDP is 34.5 %.Forces..
Slovakia has a modern services trade sector, which is the engine of the national economy, contributing about 61.5% to GDP and about 73.2% of the employed labour force. It is dominated by trade and real estate. In most regions, the market is dominated by large groups at the expense of small convenience stores. There are still many anti-competitive structures in an oligopolistic or quasi-monopolistic situation, especially in the food processing industry. There are still close links between these entrepreneurs and high-ranking leaders in the power chain. However, the arrival on the market of large foreign groups such as Metro or Tesco tends to modify this imbalance of power and to rationalise distribution channels. The Bratislava Stock Exchange (BCPB) was established in 1991 and started its listing activities in 1993. It has since remained the smallest stock exchange in Central Europe.
Also tourism in Slovakia is lagging behind, but its development suggests that it will become one of the important sectors of the Slovak economy in the coming years. It is currently the most dynamic sector. Slovakia is becoming aware of its tourism potential and is making progress year by year in this area. In order to continue to develop, it will have to continue to modernise its infrastructure and communication network and work on its international image in order to make itself better known.... and weaknesses
Just over a third of the country's land area is devoted to agriculture. The weight of agriculture in the economy has been steadily declining for decades. Its contribution to GDP is only 4 %, making the country a net importer of agricultural products. This industry is not very competitive because it is poorly managed and often organized in cooperative farms. The livestock sector (pigs, cattle, poultry) is less efficient than the plant sector, which is taken over by large companies.
If we compare Slovakia's growth rate with that of its European partners, we can see that its economy is in good shape. However, policy makers should bear in mind the structural problems facing Slovakia, namely regional disparities, poor infrastructure, an ageing population, long-term unemployment (albeit declining), but also the high sectoral concentration of exports in the automotive and consumer electronics sectors.Cocorico
Slovakia is an attractive country for foreign companies, so the French are rushing to occupy the land. There are currently 400 establishments with a workforce of over 35,000 people. Among the large French companies, we can mention Orange, today the first mobile phone operator in the country, and especially the Peugeot plant, installed in Trnava since 2006, which has become the most competitive of the PSA Group. This facility has facilitated the arrival of some thirty French equipment manufacturers including Valeo, Faurecia and Total. BNP Paribas is also present, while the Chèque Déjeuner, the famous Tickets Restaurant, is displayed in all the windows and in French, please! In the field of energy, Engie (Gaz de France) has become one of the main shareholders of the Slovak Gas Company. In 2008, Veolia won two tenders and manages water and wastewater services for 950 000 inhabitants.
Slovakia's place in world geopolitics
On the foreign policy front, Slovakia has been a member of NATO since March 2004. It has a pragmatic relationship with Russia, in particular because of its high energy dependence. On the one hand, two-thirds of the energy raw materials it consumes come from Russia. On the other hand, it derives significant revenues from the transport of Russian gas to Europe through its territory. It is therefore committed to maintaining dialogue and lifting sanctions against Russia. It maintains good relations with the Trump administration and provides material and technical support to Ukraine, in particular through the Višegrad Group. Finally, the Balkans have long been a priority in Slovakia's foreign policy. Slovakia considers this area to be a key region for European security, which is why it is in favour of EU enlargement to include the Western Balkans.
Murder of a journalist and corrupt government
Young Slovak investigative journalist Ján Kuciak and his fiancée were shot dead at their home on 21 February 2018. He was investigating links between the Calabrian mafia (the 'Ndrangheta) and Slovak politicians. The murder triggered a wave of protests throughout Slovakia in March against corruption and government policy. These were the largest demonstrations in the history of Slovakia since the Velvet Revolution of 1989. Prime Minister Robert Fico and two of his ministers are forced to resign in the midst of a crisis and are suspected of involvement in cases of embezzlement of EU funds.
More than a year later, the investigation continues and the noose is now tightening around a local mafia figure, Marián Kočner. This unprecedented crime has shaken the country and the upper echelons of power. The electorate's reaction of defiance towards the ruling coalition will be directly felt in the presidential elections of March 2019.A wind of hope named Zuzana Čaputová
Zuzana Čaputová, a 46-year-old lawyer by training, won the March 2019 presidential elections by a wide margin with 58.40 per cent of the votes against Maroš Šefčovič. A new figure on the political scene, she has based her campaign on the fight against corruption and advocates a liberal policy. She is seen by many as a counterweight to the populists in power. Representative of a new political trend, her political career is often compared to that of Emmanuel Macron. Carried by voters thirsting for renewal in a country undermined by corruption, she brings a breath of fresh air and hope even if she will not hold the reins of the country, as Slovakia gives very little power to the president. Indeed, the Slovak Republic is a democratic state of the parliamentary type. The President of the Republic is elected for five years by universal suffrage, renewable only once consecutively. The head of state has rather limited powers. He appoints the Prime Minister, the majority of whom is appointed by parliamentary elections, he is the head of the armed forces and appoints the high-ranking magistrates. The parliament is called officiel Conseil National Parliament of the Slovak Republic (NRSR). This single chamber is made up of 150 deputies elected for four years by proportional representation, with a threshold of 5 % of the votes. The Prime Minister has executive power and forms the government, which is accountable to Parliament. The executive, legislative and judicial powers are well separated. The independence and impartiality of the courts are enshrined in the Constitution.
The election of Zuzana Čaputová sounds a strong warning to the populist left of the current government, the February 2020 parliamentary elections will give the keys to power, but to whom?
