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In 1918 the Slovaks joined the closely related Czechs to form Czechoslovakia. Following the chaos of World War II, Czechoslovakia became a communist nation within Soviet-ruled Eastern Europe. Soviet influence collapsed in 1989 and Czechoslovakia once more became free. The Slovaks and the Czechs agreed to separate peacefully on 1 January 1993. Historic, political, and geographic factors have caused Slovakia to experience more difficulty in developing a modern market economy than some of its Central European neighbours.

Update No: 062 - (20/06/02)

The Slovaks are at risk of slipping back into the hands of their former dictator, Vladimir Meciar. With parliamentary elections looming in the autumn, September, he and his party are leading in the polls, able to distance themselves from the economic record of the government. It is not that the economy has not been growing or that the government has not been promoting reform. Both are occurring, but not enough to alleviate mass poverty and unemployment.
The Slovaks are being cautioned that a Meciar win would jeopardise their chances of joining NATO and, indeed, the EU. The Canadian premier, Jean Chretien, said as much to President Rudolf Schuster in early June, who assured him that, even if Meciar wins the elections, he would nevertheless not be given a mandate to form a government. 
Such an attitude does not seem compatible for democracy. But Schuster can invoke the fact that Meciar's record shows scant respect for democracy. To elect him is to elect the devil. So the liberal consensus goes.
Meciar is an instance of right-wing populism that is the current threat to that consensus in Europe, whether it be Le Pen in France or Haidar in Austria next door. How to accommodate the intolerant right-wingers is the greatest test of liberal tolerance today.

The new Meciar?
Meciar's popularity is based in the countryside. The better educated population in Bratislava and the main towns despise him and dread his return. 
Meciar promises that he is a reformed man. He intends to tackle corruption, he says. It is certainly rife. Just perhaps, on the principle of poacher-turned-gamekeeper, he is the politician to make a dent on the problem, but it is unlikely because he is first and foremost a populist and does not seek new enemies.
Foreign investors are staying way until they see the outcome of the election, a large gas consortium with the Russians excepted. The result is not likely to please them, nor Brussels or Washington DC. Unless the electors have an outbreak of common sense, not impossible but perhaps unlikely, Slovakia may be about to re-enter the European dog-house from which it only emerged when Meciar lost the last election. 

Economy rebounds
The growth of GDP has been quite satisfactory, given the slowdown in Slovakia's natural export markets in the EU. It rose by 2.2% in 2000, by 3.3% in 2001 and is rising by a prospective 3.5% this year. Also welcome is a rise in foreign direct investment (FDI), which is due to top US$3.5bn this year, after being US$2.058bn in 2000 and 1.5bn last year in 2001. These are as large as flows into Hungary.
Until the elections, Premier Mikulas Dzurinda is facing problems. Dzurinda has a difficult job running the six-party coalition government. There are endless tensions between the various parties, which make it difficult to see how they could present a united front in the elections. He lost his reformist finance minister, Brigita Schmognerova, earlier this year in February after he vainly tried to protect her. Her successor is another reformer, Frantisek Hajnovic, an economist from the National Bank. A continuity of policy is highly likely. 

Regional disparities
There is a huge divide between the Bratislava region and the countryside and smaller towns to the east. Unemployment in the former is only 6%, but in the latter it is running at over 30% in some areas. Bratislava and its surrounds have a GDP at 95% of the EU average. Only Prague on 124% fares better as a region among EU entry candidates. 
But the rest of the country comes in at less than 50% of the EU average. A law to exempt investors from taxes in regions with more than 10% unemployment is under consideration and certainly seems a good idea.
Foreign investors prefer the developed regions rather than the backward ones for all sorts of reasons. For one thing Bratislava is in the right place, only 60km from Vienna. It has the best-educated people, the institutes and infrastructure. This is the ruling coalition's natural power base. But the more numerous provincial population are generally behind Meciar. Hence the reason he is likely to win. 

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Potential Eurobond issue if government remains in power

If the government succeeds in clinching the September general elections, it will probably move to issue another Eurobond to cover 36.3bn Slovak crowns (US$764m) in debt maturing next May, CTK News Agency has reported.

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Slovak Statistical Office issues projection of key indicators in 2002

Slovak Statistical Office (SU) and INFOSTAT (Institute of Informatics and Statistics) predict the gross domestic product (GDP) will grow by 3.7 per cent in 2002, an office deputy chairman said on 13th June, TASR News Agency web site has reported. 
The inflation rate should be at 4.6 per cent according to the office, and at 4.7 per cent according to INFOSTAT by the end of this year. The office expects average inflation at 3.8 per cent, while INFOSTAT prognoses say it will be 4 per cent. 
Employment should go up by 0.1 per cent, or by 0.6 per cent according to SU and INFOSTAT, respectively. Unemployment rate will be at 19 per cent, INFOSTAT expects it to be at 18.7 per cent. Both institutions say unemployment will drop, according to SU by 1.2 per cent, while INFOSTAT predicts even larger drop by 2.3 per cent. 
Average number of employees will increase by 0.3 per cent to 2.0125 million people, while INFOSTAT says it will rise by 0.7 per cent. 
SU expects an average wage at 13,550 korunas, up by 9.6 per cent; according to INFOSTAT, this figure will rise by only 8.5 per cent. 

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Hydrostav loses road building contract 

The Slovak Road Administration (SSC) has withdrawn from a contract with construction firm Hydrostav on the building of the Ladce-Sverepec highway section in northwest Slovakia, The Slovak Spectator has reported.
SSC director, Dušan Matonok, said it due was Hydrostav's failure to meet contractual obligations and unpaid bills to subcontractors, SSC has signed contracts on the remaining work with Bratislava-based construction firm Doprastav, which was second in the original tender for the project.
Hydrostav, once the largest construction company in Slovakia, meets all criteria for bankruptcy, said Matonok in late May, adding: "Only the inactivity of the courts and ignoring of duties by the Hydrostav management are keeping this company seemingly alive."
Matonok also said that the Hydrostav's directorate is closed, the firm is refusing to take mail, and that the few employees who have not been laid off are receiving only a partial wage.
While Hydrostav has declined to release figures on their debt, construction insiders estimate that the company owes more than Sk1.2 billion.

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