Well placed for a solid growth rebound
Overview:
Despite its strong economic fundamentals Slovakia has not been immune to the global economic slowdown. Its heavy reliance on exports to the EU has seen economic growth fall further than expected. However, any attempt to compare Slovakia’s rapid growth slowdown with that recorded by other economies in Eastern Europe is misplaced. Rather than being one of the countries that have suffered a huge credit boom and bust that may take years to work out and will likely result in very weak growth (e.g. the Baltic States and parts of South Eastern Europe), Slovakia has successfully built a strong export base. As demand recovers in its key export market it will be well placed to benefit. Membership of the Euro has unquestionably aided financial market stability during the crisis. However, Slovakia will now have to cope with the downside: challenges to competitiveness posed by a very strong Euro.