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Slovak Republic Economic Snapshot

5 Feb 2019: The economy is in a phase of strong, broad-based expansion. Slovakia is benefitting from strong links with the world economy, especially EU Members, and has been catching up with higher-income countries.

Unemployment has fallen below 7%, a historically low level. Strong employment growth due to inflows of investment and the booming economy have brought labour shortages in some areas.

Mild fiscal consolidation is welcome in a context of such strong expansion. International trade tensions and volatility pose risks to Slovakia’s open economy. A tighter budget baseline would make room for future action if any of these risks were realised.

Not everyone has benefited equally from growth. Long-term unemployment remains prevalent in the east and some central regions. The majority of the Roma (who make up around 8% of the population) live in poverty and face social exclusion in most aspects of everyday life.

Slovakia’s production focuses mainly on low value-added downstream activities. Slovakia’s strong productivity growth has arisen from joining global value chains, mainly in labour-intensive segments, such as car assembly.

Foster entrepreneurship and innovation to support long-term growth. The government needs to continue to improve the regulatory environment for business.

5 Feb 2019: The economy is in a phase of strong, broad-based expansion. Slovakia is benefitting from strong links with the world economy, especially EU Members, and has been catching up with higher-income countries.

Unemployment has fallen below 7%, a historically low level. Strong employment growth due to inflows of investment and the booming economy have brought labour shortages in some areas.

Mild fiscal consolidation is welcome in a context of such strong expansion. International trade tensions and volatility pose risks to Slovakia’s open economy. A tighter budget baseline would make room for future action if any of these risks were realised.

Not everyone has benefited equally from growth. Long-term unemployment remains prevalent in the east and some central regions. The majority of the Roma (who make up around 8% of the population) live in poverty and face social exclusion in most aspects of everyday life.

Slovakia’s production focuses mainly on low value-added downstream activities. Slovakia’s strong productivity growth has arisen from joining global value chains, mainly in labour-intensive segments, such as car assembly.

Foster entrepreneurship and innovation to support long-term growth. The government needs to continue to improve the regulatory environment for business.