In the pandemic year 2020, the Slovak economy recorded a drop in GDP by 5.2%. This is the second worst economic result since the establishment of the Slovak Republic in 1993. At the time of the global financial crisis in 2009, economic performance fell by 5.5%.
The nominal volume of GDP created in 2020 reached EUR 9billion in current prices and EUR 8billion in constant prices (i.e. after subtracting inflation). All significant sectors of the Slovak economy showed a decline in 2020.
The Slovak economy in 2020 was driven by household consumption and exports. Consumer spending rose by 0.9% year-on-year. Household consumption is a key component of GDP and accounts for 55% of GDP.
Slovak exports in 2020 fell by 7.2% year-on-year. However, the decline was lower than in other EU countries. Industry was the driver of exports. The Slovak economy is strongly focused on industry (it makes up 22% of GDP). The pandemic has limited the functioning of services in particular. Industry fell by 9.1% year-on-year.
Public debt reached 63.6% of GDP in 2020 and increased by 15 percentage points year-on-year. In 2021, the public debt should increase to more than 66% of GDP and in the following years to the limit of 70% of GDP. The inflation rate in 2020 reached 1.9% and decreased by 0.9 percentage points year-on-year.
Due to the pandemic, 2020 saw the highest year-on-year increase in unemployment since 2009. The unemployment rate reached 6.7% and the total number of employees in the economy decreased by more than 52 thousand. persons (2%) to 2.531 million workers.
The balance of the trade balance was positive in 2020 in the amount of EUR billion, which is EUR billion more than in 2019.
So far, the Slovak government has invested 2.6% of GDP (approx. EUR billion) in supporting the economy and is planning further assistance. Considering the amount in other EU countries, this is a lower financial support. Government assistance is implemented through several ministries (finance, transport, labor and social affairs) and includes contributions to employers to replace the employee’s wages with the aim of maintaining jobs, rent subsidies, deferment of loan repayments, deferment of payments for social security contributions, guarantees for loans from commercial banks, allowance for the treatment of a family member, etc.
Post-COVID-19 opportunities for foreign exporters
According to allcountrylist,the automotive industry is the driving force of the economy. It creates almost 14% of GDP, 50% of total industrial production and 47% of Slovak exports. The sector consists of 4 car manufacturers, 350 suppliers and directly employs 177,000 people. people. Slovakia is the largest producer of cars per thousand inhabitants in the world (180 cars in 2020). Electromobility is being developed here. In 2030, according to an estimate, 30–40 thousand people should drive in Slovakia. electric cars.
Opportunities exist for the supply of parts and accessories for cars with internal combustion engines and electric cars. The potential is offered by building fast charging stations for electric cars on highways and main roads, increasing the capacity of car batteries, building filling stations for liquefied gas (LPG), compressed gas (CNG) and hydrogen cars.
Transport industry and infrastructure
Public transport and transport infrastructure are burdened with a large investment debt. The outdated vehicle fleet requires renewal and the pressure to green it is growing. For this reason, there will continue to be interest in trolleybuses, electric buses and hydrogen buses. Every public contract for a new vehicle fleet must contain a share of ecological vehicles.
By 2026, 48% of buses and trolleybuses should be ecological. The Bratislava transport company plans to purchase hybrid trolleybuses with batteries, electric buses and buses using biofuels.
Currently, 766 km of highways and expressways are open in Slovakia. The main government priority in the construction of transport infrastructure is the completion of the remaining sections of the D1 highway (Bratislava–Košice). Other priorities include bypasses of the towns of Levice and Šaľa, completion of the D3 highway (Žilina – Polish border), construction of some sections of expressways R2 (Košice bypass), R4 (Prešov bypass), reconstruction of 1,323 km of first-class roads, modernization of 485 road bridges or investment in an intelligent traffic management system (digital traffic signs).
In the area of river transport, the government’s priority is the Dunajbus project. This is a personal boat shuttle service along the Danube River between Bratislava and Šamorín. The project, worth EUR 40 million, includes the delivery of 5 electric ships with a capacity of 125 passengers and the construction of 2 fast charging stations and boarding piers.
In recent years, Slovakia has consumed approximately 10% more electricity than it produces. After the planned start-up of Unit 4 at the Mochovce nuclear power plant in 2023, electricity production will exceed consumption by approx. 5-10% and Slovakia will become a net exporter of electricity.
In the electric power industry, opportunities to increase the capacity of the cross-border network to the Czech Republic, Hungary and Ukraine include. This involves the construction of new 400 kV substations and 400/110 kV transformers or the modernization of 400 kV substations.
The potential is represented by the production of hydrogen with the help of surplus electricity from nuclear power plants, the construction of battery storage of electricity or the installation of equipment using renewable energy sources (wind parks, solar power plants). The potential for electricity production has abundant geothermal energy resources in a large part of Slovakia. There is still no geothermal power plant in Slovakia.
Slovakia is a very developed country in terms of gas infrastructure and has the second densest network in Europe after the Netherlands. In the gas industry, the conversion of a part of the transit gas network to the transport of hydrogen, the reconstruction of gas pipelines and other ground infrastructure, or the construction of facilities for the processing of biowaste and the production of biogas offer opportunities.
In the heating industry, opportunities include the construction of a modern heating plant at the Nováky u Prievidze power plant to burn natural gas and wood chips and the use of geothermal energy sources for heat supply. Opportunities are offered by the search and exploration of new sources of geothermal energy (Košická basin), construction of deep wells, construction of heat pipes.
Opportunities for Czech companies are also offered by the energy recovery of municipal waste, improving the energy efficiency of buildings (e.g. insulation, biomass boilers, photovoltaic panels, solar collectors, heat pumps, energy-saving lighting). In 2021, the Green Homes project continues in Slovakia to finance support for the installation of renewable energy sources.
A new defense strategy was adopted in January 2021. Modernization of technology and infrastructure will develop at the same time, because they are interconnected. The concept of long-term purchases of the Ministry of Defense until 2035 is to be presented in the summer of 2021. The current situation in the army is characterized by the obsolescence of armaments, equipment, material and communication and information systems.
On the basis of its commitments to NATO, Slovakia must complete the construction of a heavy mechanized brigade. Defense spending is to reach the required 2% of GDP in 2024, and Slovakia wants to increase spending on defense research.
In the field of technology modernization, larger and smaller armored personnel carriers, artillery systems, small arms and trucks will be purchased. In the field of defense infrastructure modernization, the main projects include the modernization of Sliač airport for 14 new F-16 fighters, the Kuchyňa airport for MiG-29 fighters, and the construction of the command of special operations forces.
Agricultural and food industry
The area of arable land reaches 1.35 million hectares, while irrigation systems cover only 25%. The number of employees in agriculture and the food industry is decreasing every year. In animal production, the number of pigs is significantly decreasing, and the number of beef cattle is also showing a decrease. Crop production is dominated by the cultivation of cereals (wheat) and oilseeds (rape oil), which make up 40% of agricultural production. The EU average is 15%.
The share of Slovak food in domestic retail is only 40%. Edible oils, processed fruit, processed vegetables, and pork have the lowest representation. About 60% of food is imported. Every working day, 800 food trucks arrive in Slovakia. Slovakia achieves full self-sufficiency only in the production of sugar and cereals. The negative balance of foreign trade in agriculture and the food industry grows every year. In 2020, it reached approx. EUR billion.
In Slovakia, there is a lack of processing capacity for meat, vegetables and fruit, and the existing ones need to be modernized. The canning industry has almost disappeared. Opportunities also exist in the construction and modernization of irrigation systems, the supply of meat and meat products, canned and frozen vegetables and fruits, dairy products.
Rail and rail transport
The total length of railway lines in Slovakia reaches 3,623 km, while up to 35% of the lines are problematic and 56% of the lines are not electrified. Rail transport has long been an underfunded sector. The infrastructure manager of the Railways of the Slovak Republic (ŽSR) estimates the investment debt on railway infrastructure at EUR 15 billion.
The government’s main priorities in the area of railway infrastructure include increasing the speed on the Čadca line – the border with the Czech Republic from 80 km/h. to 120 km/h, strengthening of the Bratislava–Košice line, modernization of the Žilina and Bratislava railway junctions, electrification of the lines. ŽSR plans to modernize the security equipment, railway top, tracks, switches and platforms.
The prospective megaproject is the construction of a 375 km long broad-gauge line from Košice to the border with Austria worth EUR 6 billion. The goal of the project is to end transshipment of goods in eastern Slovakia. Trains on the new line will travel at a speed of 140 km per hour.
The national railway carrier Železniční společnost Slovensko (ŽSSK) is currently implementing the largest modernization of its fleet in history. The average age of ŽSSK cars is 21 years. ŽSSK will purchase electric units, diesel engine units and passenger cars. ŽSSK is also preparing the construction of regional train maintenance centers (Nové Zámky, Zvolen, Humenné) with a total value of EUR 100 million.
In Slovakia, trams run in Bratislava and Košice. Their restoration took place in the past 6 years. The Bratislava transport company is considering the purchase of another 40 trams in the next 3 years, as well as the replacement of tram tracks. The construction of a tram line is being considered in Žilina.