Slovakia Economy - overview

Economy - overview: Slovakia has mastered much of the difficult transition from a centrally planned economy to a modern market economy. The DZURINDA government made excellent progress during 2001-04 in macroeconomic stabilization and structural reform. Major privatizations are nearly complete, the banking sector is almost completely in foreign hands, and the government has helped facilitate a foreign investment boom with business friendly policies such as labor market liberalization and a 19% flat tax. Foreign investment in the automotive sector has been strong. Slovakia's economic growth exceeded expectations in 2001-07 despite the general European slowdown. Unemployment, at an unacceptable 18% in 2003-04, dropped to 8.6% in 2007 but remains the economy's Achilles heel. Slovakia joined the EU on 1 May 2004 and will be the second of the new EU member states to adopt the euro in 2009 if it continues to meet euro adoption criteria in 2008. Despite its 2006 pre-election promises to loosen fiscal policy and reverse the previous DZURINDA government's pro-market reforms, FICO's cabinet has thus far been careful to keep a lid on spending in order to meet euro adoption criteria. The FICO government is pursuing a state-interventionist economic policy, however, and has pushed to regulate energy and food prices.

Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.

Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of May 16, 2008