With the establishment of the Slovak Republic in January 1993, Slovakia continued the difficult transformation from a centrally-planned to a modern market-oriented economy. This reform slowed in the 1994-98 period due to the crony capitalism and irresponsible fiscal policies of Prime Minister Vladimir Meciar's government. While economic growth and other fundamentals improved steadily during Meciar's term, public and private debt and trade deficits soared, and privatization, often tarnished by corrupt insider deals, progressed only in fits and starts. Real annual GDP growth peaked at 6.5% in 1995 but declined to 1.3% in 1999. Much of the growth in the Meciar era, however, was attributable to high government spending and over-borrowing rather than productive economic activity.
The pace of economic reforms picked up during the second administration of Prime Minister Mikulas Dzurinda, which oversaw the simplification of the tax system, reforms of the labor code and pension systems, and a large number of privatizations. With the onset of the global recession in 2008, Slovakia’s highly export-dependent economy began to contract, finishing that year with 6.4% growth, following 10.4% growth in 2007. The economy slowed rapidly in the first quarter of 2009--contracting 12% from the previous quarter--as the deepening recession was exacerbated by a political crisis between Russia and Ukraine that led to a 3-week disruption of Slovakia’s natural gas supply. A return to modest growth was forecast for 2010.
Slovakia entered into the European Exchange Rate Mechanism in November 2005, and joined the European Monetary Union on January 1, 2009. Headline consumer price inflation dropped from a high of 26% in 1993 to 1.4% in 2009. The current account deficit, including the cost of the second pension pillar, reached 5.0% in 2008 then moved considerably higher. The general government deficit for 2010 was forecast at 5.5%, although private sector analysts expected it to be as high as 7.0%. Government debt was estimated at 37.1% of GDP at the end of 2009.
Foreign direct investment (FDI) in Slovakia accounted for much of the growth in the period 2000-2008. Cheap and skilled labor, low taxes, a 19% flat tax for corporations and individuals, no dividend taxes, a relatively liberal labor code, and a favorable geographical location are Slovakia's main advantages for foreign investors. The main points of economic reform remained untouched even after the 2006 elections. FDI inflow cumulatively reached $39.4 billion in 2008; the total inflow of FDI in 2008 was $1.39 billion.
Germany is Slovakia's largest trading partner, purchasing 20.1% of Slovakia's exports and supplying 16.8% of its imports in 2009. Other major partners include the Czech Republic (12.9% of Slovakia’s exports and 12.3% of Slovakia’s imports), Italy (6.1% and 3.7%), Russia (3.8% and 9.0%), Austria (5.8% and 2.9%), Hungary (6.3% and 5.3%), Poland (7.2% and 3.9%) and France (7.8% and 4.0%). Slovakia imports nearly all of its oil and gas from Russia and its export markets are primarily OECD and EU countries. More than 85.1% of its trade in 2008 was with EU members and with OECD countries (86.2%). Slovakia's exports to the United States made up 1.7% of its overall exports in 2008 ($1.21 billion), while imports from the U.S. accounted for 1.2% of its total purchases abroad ($847.24 million).
GDP (2010 est.): $88.4 billion.
GDP growth rate (2010): 4.0%.
Nominal GDP per capita (2010): $16,288 (ING Bank).
Unemployment (2010): 13.5%.
Consumer price inflation (2010): 1% (Ministry of Finance).
Public deficit (2009): 7.9% GDP (final).
Natural resources: Antimony, mercury, iron, copper, lead, zinc, magnesite, limestone, lignite, uranium (not yet in production).
Agriculture: Products--grains, potatoes, poultry, cattle, hogs, sugar, beets, hops, fruit, forest products.
Industry: Types--iron and steel, chemicals, electro-chemical, automobiles, light industry, food processing, back-office support, engineering, building materials.
Trade (2009 est.): Exports--$55.4 billion: machinery and energy equipment, electrical equipment, audio/video equipment, vehicles, base metals, mineral products, plastics and rubber, iron and steel, machinery and energy equipment, plastics. Export partners (2009)--Germany 20.1%, Czech Republic 12.9%, France 7.8%, Poland 7.2%, Hungary 6.3%, Italy 6.1%, Austria 5.8%. Imports (2009 est.)--$53.7 billion: machinery, vehicles, electrical equipment, mineral fuels and oils, audio/video equipment, base metals. Import partners (2009)--Germany 16.8%, Czech Republic 12.3%, Russian Federation 9.0%, South Korea 6.8%, China 5.8%, Hungary 5.3%. (Source: Statistical office of the Slovak Republic).
Foreign investment (2008, National Bank of Slovakia data): Cumulative--$39.4 billion; FDI inflow $1.39 billion in 2008. Sources of direct foreign investment**--Czech Republic 54.2%, Cyprus 20.4%, Poland 4.5%, Austria 4%, France 3.5%, South Korea 3.1%, Germany 3%, Italy 2.6%. Sectors of direct foreign investment--machinery, industrial production, electrochemical, automotive, financial services, information technology (IT), wholesale and retail trade, transportation and telecommunications.
*Figures are based on immediate city's (not region) permanent resident population.
**Government of Slovakia official statistic. A 2008 U.S. Embassy survey found that, taking into account investments of U.S. subsidiaries in Europe, U.S. investment is more than 15% of the total.
Slovakia's highest legislative body is the 150-seat unicameral National Council of the Slovak Republic. Delegates are elected for 4-year terms on the basis of proportional representation. The Slovak political scene supports a wide spectrum of political parties, including several center-right parties and the Slovak National Party.
In January 1999, Parliament passed a constitutional amendment allowing for direct election of the president. Kosice Mayor Rudolf Schuster was elected president in a May 1999 run-off with former Prime Minister Meciar and took office on June 15, 1999. On April 17, 2004, Ivan Gasparovic, a former Meciar deputy, was elected president; he was re-elected to a second 5-year term on April 4, 2009. Virtually all executive powers of government belong to the prime minister, but the president serves as commander-in-chief of the armed forces, is empowered to grant pardons, and has the right to return legislation to Parliament. Parliament, however, can override this veto with a simple majority.
The country's highest appellate forum is the Supreme Court; below that are regional, district, and military courts. In certain cases the law provides for decisions of tribunals of judges to be attended by lay judges from the citizenry. Slovakia also has a special Constitutional Court, which rules on constitutional issues. The 13 members of this court are appointed by the president from a slate of candidates nominated by Parliament.
In 2002, Parliament passed legislation that created a Judicial Council. This 18-member council, composed of judges, law professors, and other legal experts, is responsible for the nomination of judges. All judges, except those of the Constitutional Court, are appointed by the president from a list proposed by the Judicial Council. The Council determines principles for the selection, evaluation, promotion, and continuing education of judges, and should establish principles of judicial ethics. The Judicial Council appoints Disciplinary Senates in cases of judicial misconduct.
Principal Government Officials
Prime Minister--Iveta Radicova
Minister of Foreign Affairs--Mikulas Dzurinda
Ambassador to the United States--Peter Burian
Ambassador to the United Nations--Milos Koterec
Ambassador to NATO--Frantisek Kasicky
Ambassador to the European Union--Ivan Korcok
The Slovak Republic has an embassy in the United States, located at 3523 International Court, NW, Washington, DC, 20008.
Slovakia maintains a permanent mission to the United Nations in New York and consulates general in New York (since September 2003) and in Los Angeles (since April 2005). Slovakia has 11 honorary consulates; in Chicago, Cleveland, Denver, Detroit, Denver, Kansas City, Indianapolis, Miami, Minneapolis, Pittsburgh, and San Francisco.
Type: Parliamentary democracy.
Independence: The Slovak Republic was established January 1, 1993 (former Czechoslovak Republic established 1918).
Constitution: Signed September 3, 1992.
Branches: Executive--president (head of state), prime minister (head of government), cabinet. Legislative--National Council of the Slovak Republic (150 seats). Judicial--Supreme Court, Constitutional Court.
Political parties: Distribution of the 150 parliamentary seats is Direction-Social Democracy (Smer-SD) 50 seats; Slovak Democratic and Christian Union (SDKU) 28 seats; Slovak National Party (SNS) 19 seats; Hungarian Coalition Party (SMK) 15 seats; People’s Party - Movement for a Democratic Slovakia (LS-HzDS) 15 seats; Christian-Democratic Movement (KDH) 9 seats; Bridge (Most-Hid) 5 seats; Slovak Conservative Democrats (KDS) 4 seats; unaffiliated 5 seats. Other parties include Alliance of New Citizens (Ano); Communist Party of Slovakia (KSS); Freedom Forum (SF); Movement for Democracy (HzD).
Suffrage: Universal at 18 years.
Administrative divisions: Eight administrative regions, 79 districts.
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