The Slovak Republic overview

Cityscape at night

In the Slovak Republic we focus on:

Deepening financial intermediation and support for SMEs. The EBRD’s engagement in the financial institutions sector is focussed on further enhancement of the availability of credit finance to small and medium-sized local enterprises as well as to small municipalities with an emphasis on deepening financial intermediation to SMEs in the less developed regions of the country. The EBRD also seeks to expand programmes implemented through commercial banks providing funding and expert assistance for small energy efficiency and renewable energy investments. We are also pursuing opportunities with financial intermediaries on equity and mezzanine financing.

Supporting investments in infrastructure, energy security and energy efficiency. The EBRD is supporting the development of viable financing structures to secure long term financing for projects in the commercial infrastructure sector through co-operation with other IFIs and private sector participants. We are promoting the diversification of energy supply with a focus on renewable energy sources and energy efficiency throughout sectors to enhance energy security, reduce energy intensity and meet EU environmental targets.

Support cross border co-operation and investments of leading local entities in other countries of EBRD operations in order to enhance their regional presence.

As well as being a country where the EBRD works, the Slovak Republic is also an EBRD donor with  about EUR  14 million of contributions.  In 2015 the Slovak Republic approved financing totalling about €3.1 million for assignments, including €1 million each to the Sustainable Resource Initiative Policy Dialogue Framework and the Municipal and Environmental Infrastructure TC Framework Facility.  It also participates in two multi-donor funds including the Western Balkans Investment Framework and the Eastern Europe Energy Efficiency and Environment Partnership (E5P) Fund. For the Slovak Republic it is particularly important to develop the potential for energy efficiency in the region, which will contribute to energy security and economic competitiveness.
The EBRD’s latest strategy for the Slovak Republic was adopted on November 2017

Current EBRD forecast for the Slovak Republic’s real GDP growth in 2019 3.6%

Current EBRD forecast for the Slovak Republic’s real GDP growth in 2020 3.3%

Economic expansion accelerated to 4.1 per cent in the Slovak Republic in 2018, boosted primarily by investment and household consumption. In particular, private investment saw a significant improvement, largely due to the finalisation of the construction of Jaguar’s car plant, which started its operations in October 2018.

In contrast, public investment remained subdued, in line with the still slow absorption of EU funds from the current budget, at below 20 per cent as of end-2018. Tightening labour markets, especially driven by the increasing shortages of qualified labour, resulted in significant wage hikes in the industry sector and ultimately further underpinned private consumption.

Yet, the anticipated slowdown in western Europe, the key trading partner of the Slovak Republic, constitutes a significant negative risk to GDP growth in the short term. Mounting labour shortages and uncertainty related to Brexit are other risks; according to our estimates, the trade volume of the Slovak Republic’s exports potentially affected by a hard Brexit amounts to 1.9 per cent of the total domestic output, mainly in the automotive and machinery sectors.

As a result, we forecast that GDP growth will decelerate to 3.6 per cent and 3.3 per cent in 2019 and 2020, respectively.