PMR Research is a specialised custom market research unit of PMR Ltd., a British-American company based in Poland. We offer a wide range of research services in Central and Eastern Europe for companies interested in business over the countries in the region.

Research services provided by PMR Research in Slovakia include:

• brand and company image studies
• research on customer preferences, their satisfaction and their purchasing habits
• product concept tests
• usage & attitude studies
• internet surveys
• quantitative surveys - telephone, CATI, face-to-face
• qualitative research - focus groups, IDIs
• industry analyses (comprehensive analyses of given market sectors performed using PMR's proprietary methodology PMR MarketInsight)
• preparation of databases
• fieldwork services

Why to invest?

EU member state Member of the Eurozone since January 1, 2009 Industrial traditions Dynamic development in recent years High level of investment in infrastructure Low labour costs Labour code rated by the World Bank as among the most flexible in the EU Favourable geographical location linking East to West Relatively low tax rate of 19% and 0% dividend tax

Business and economic environment

Since its so-called “velvet divorce” from the Czech Republic at the beginning of the 1990s, Slovakia has often been referred to as a country with little prospect of strong economic development. This was attributed to the fact that during the existence of Czechoslovakia most modern enterprises were located in what is now the Czech Republic. However, the Slovaks have proved otherwise, sustaining strong development which has made the country’s per capita GDP the fourth highest in the region. The country is constantly investing in its infrastructure and adopted a flat tax rate of 19%, which lured a large number of investors. Current investment opportunities are observed in areas such as machinery and precision engineering, vehicles, metallurgy and metal processing, electronics, chemicals and pharmaceuticals, R&D, technology centres, ICT and business process outsourcing. EU accession has accelerated change. The labour code has been judged by the World Bank to be one of Europe’s most flexible, the currency risk was reduced with entry to the Eurozone on 1 January, 2009, and the influx of funds from the EU is expected to continue. Last but not least, the country has a favourable location between East and West, and between Poland, Hungary, Austria and the Czech Republic.
 
The business environment in Slovakia is very favourable in terms of tax. Slovakia has implemented a flat rate of 19% for all taxes, with negligible exceptions. The tax reform in 2004 was a positive change, it made the system simpler and more attractive to foreign investors. It became one of the causes of strong economic growth in the country. Overall, in comparison with other countries in Central and Eastern Europe, Slovakia is currently taking advantage of its tax system. The 19% corporate tax is comparable with those of other economies in the region.
 
The effective tax rate on investments in Slovakia faced by private investors (which represents the combined impact of corporate tax on profits and tax on dividends) is one of the lowest among the developed nations.

Between 2004 and 2008, annual GDP growth in Slovakia remained strong, at an average of 7.4%. However, as a result of the global crisis, there was a 4.7% reduction in GDP in 2009, most of which was accounted for by the first two quarters, with a recovery in 2010, when 4.1% growth was witnessed. One of the reasons for the shrinkage was the heavy dependence of the Slovakian economy on the car industry, which was badly hit by the global slowdown. In recent years, growth has been fostered by FDI, which came to EUR 9bn between 2006 and 2008 alone (mostly as a result of investment in the car industry). Despite the fact that the country is the manufacturing hub of Europe, most Slovak GDP is accounted for by the service industry, which is dominant in the country (64%).
 
In 2004, the unemployment rate peaked at 14.3%, only to level out at 9.6% in 2008 and then increase again to 14.1% in 2010. However, another reduction, to 11-12%, is expected in 2011 or 2012.

The inflation rate recorded in Slovakia in 2006 was 4.3%, but it has been falling steadily since then, to 0.7% in 2010. Over the next two years, it is expected to remain below 2%, like that in the Eurozone.
 
The most serious challenge ahead for the Slovak economy is to remain competitive after the adoption of the Euro, as the neighbouring economies of Poland, the Czech Republic and Hungary, all of which are outside the Eurozone, have more flexibility in terms of amending their monetary policies to remain attractive as investment hubs. However, the country overcame the combined effects of a change in currency and an economic crisis in the first half of 2009 and emerged stronger: the economy has been growing for the past year-and-a-half, and this is expected to continue. One of Slovakia’s advantages is the fact that the country has succeeded in keeping salaries low, with the 2008 average standing at EUR 723, in comparison with EUR 904 in Poland, EUR 944 in the Czech Republic and EUR 799 in Hungary.
 
Social environment

Slovakia has a population of 5.4 million, which is growing slightly (2010). Despite its size, the country is ethnically diverse, principally because of its multicultural past. At present, Slovaks are the majority (85.5%). The most substantial ethnic minority is Hungarian (9%) in the southern part of the country, followed by Roma (Gypsy) 1.7%, Czechs 0.8%, and others 2% (mainly Moravians, Silesians, Ruthenians, Ukrainians, Germans, Poles, Croatian, Turks and Vietnamese). Slovak is the official language.
 
Slovakia is an urbanised country: approximately 56% of the population live in towns or cities, and this number has been growing constantly in recent years. The capital, Bratislava, has a strategic location close to Vienna and Budapest. Other important cities are Kosice, Zilina, Trnava, Presov and Nitra. The standard of living is much higher in the cities (and in Bratislava in particular), and regional differences are one of the country’s major problems.
 
The education system consists of primary schools, secondary schools and schools of higher education, which include universities. The majority of schools are public or state institutions, although private and church-owned schools have also existed since 1990. The literacy rate in Slovakia is 99%, according to UN estimates.
 
Infrastructure and technological environment

The road network in Slovakia consists of 43,761 km of roads (with the exception of motorways and expressways). As of December 2009, there were 384 km of motorways and 135 km of expressways. According to transport ministry plans, the total number of motorways should reach 511 km by 2014 and connect the west and east of Slovakia. There are six international airports in Slovakia (Bratislava, Kosice, Zilina, Sliac, Poprad and Piestany). The most important, by far, is Bratislava.
 
The amount invested in 2008 was Euro 1.7bn, a substantial reduction in comparison with Euro 4.6bn in 2006, and EUR 2.7bn in 2007, of which more than 90% came from the EU. The substantial amount invested by the car giants KIA and Peugeot, both of which started production in Slovakia in 2006, explains the discrepancy in the level of FDI. Foreign investment remains the driver for economic growth, which is a problem at times of crisis such as 2009, which saw steep reductions in FDI in most of Europe.
 
Political environment

After the Communist period (1948 – 1989), Czechoslovakia was separated into two different countries on 1 January, 1993.

Slovakia is a parliamentary democratic republic with a multi-party system. Executive power is exercised by the government, which is led by the Prime Minister. The judiciary is independent of the executive and the legislature. The President is the head of state and is elected by a direct popular vote for a five-year term.

The current President of Slovakia is Ivan Gasparovic. Most executive power lies with the Prime Minister, the head of the government. The current holder of the office is Iveta Radicova. She is the leader of a four party, centre-right coalition, whose main focus has been economic revival and foreign policy in the region.
 
The corruption perception index in Slovakia stood at 4.3 last year, in comparison with 4.5 in 2009 and 4.9 in 2008. This indicates that there is still a risk that government corruption similar to that of 1993-1998 might return.
 
Slovakia is divided into three administrative levels: regions (8), districts (79) and municipalities (over 2000).

General Data

Area: 49,036 sq km
Population: 5.4m (2010)
Capital: Bratislava
Language: Slovak (official language), but approximately 11% of the population also speak Hungarian
National boundaries: Poland 420 km, Ukraine 90 km, Hungary 676 km, Czech Republic 197 km, Austria 91 km

Major economic indicators

	2007	2008	2009	2010	2011f
GDP (EUR bn)	54.8	64.8	61.8	64.3	67.1
Population (m)	5.4	5.4	5.4	5.4	5.4
GDP per capita (EUR)	10155	11993	11444	11900	12426
GDP (constant prices y-o-y %)	10.4	6.4	-4.7	4.1	4.3
Exports, real, y-o-y (%)	13.8	3.2	-16.5	14	8.2
Imports, real, y-o-y (%)	8.9	3.3	-17.6	13.8	7.9
CPI (average, y-o-y %)	2.8	4.6	0.9	0.7	1.9
Central bank reference rate	4.25	2.5	1	1.00	1.00
Monthly wage, nominal (EUR)	669	723	740	765.9	819.5
Unemployment rate (%)	11	9.6	12.1	14.1	12.7
Net FDI (EUR bn)	2.7	1.7	1.2	1.8	1.7
FDI % GDP	4.4	2.5	1.9	2.8	2.5
Exchange rate to USD AVG	24.64	21.27	1.42	1.35	1.39
Exchange rate to EUR AVG	33.78	31.29	1	1	1

Last update: Q1 2011

Useful data

Currency: Euro (since 1.1.2009)
Time zone: GMT +1
Area code: +421

If you would like to find out more on the Slovakian market opportunities please do not hesitate to contact us directly:
phone: (48 12) 618 90 80
faks (48 12) 618 90 08
e-mail: [email protected]

Slovakia Examples of projects