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.  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 2018 3.9%

Current EBRD forecast for the Slovak Republic’s real GDP growth in 2019 4.0%

The economic expansion in the Slovak Republic accelerated to 3.9 per cent year-on-year growth in the first half of 2018. While household consumption remained strong, it was investment, at a double-digit growth rate, that made the largest positive contribution to GDP growth. Exports are benefiting from strong external demand and extended production capacity in the car industry. While the unemployment rate has been below 7 per cent since mid-2018, the share of long-term unemployed still stands at 63 per cent of the total unemployed, which is one of the highest rates in the EU. The high levels of structural unemployment and skills mismatch exacerbate the already-persisting labour shortages, which have ballooned over time, largely triggered by significant gaps in the quality of education.

GDP growth is forecast to reach 3.9 per cent this year and 4.0 per cent in 2019. Investment is expected to remain solid, underpinned by the accelerated EU funds utilisation and a further expansion of production capacities in the car industry. Labour shortages will contribute to rising nominal wages and, as a result, household consumption will remain strong, only slightly held back by growing inflation.

On the downside, rising trade protectionism in the global economy constitutes a direct risk for the export-oriented Slovak economy. Long-term growth will strongly depend on ultimate solutions to structural challenges, in particular in the labour market.