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

Business and economical environment

After its so called ‘velvet divorce’ with the Czech Republic in the beginning of the 1990s, Slovakia was often referred to as a country with little chances for strong economic development. This was attributed to the fact that during the existence of Czechoslovakia, a majority of modern enterprises were located in the present day Czech Republic. However, the Slovaks have proved otherwise, sustaining strong development which serves to explain the country’s high GDP per capita, fourth in the region. The country is making continuous investment into its infrastructure, and was early in adopting a flat tax rate of 19%, which lured a large number of investors. Current investment opportunities are observed in such sectors as machinery and precision engineering, automotive, metallurgy and metal processing, electronics, chemistry and pharmaceuticals, R&D, technology centres, ICT and business process outsourcing. The accession to the EU in 2004 has accelerated changes. The labour code has been judged by the World Bank as one of Europe’s most flexible, the currency risk has been reduced with the entry to the Eurozone on January, 1st 2009 and the inflow of funds from the EU is not going to dry up any time soon. 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 paying taxes. Slovakia has implemented flat tax rate at 19% for all type of taxes with minimum exceptions. The tax reform in 2004 was a positive change in countries tax system, make it simpler, more attractive for foreign investor and it became one of the reasons for strong economic growth in the country. Overall, when compared to other countries in Central and Eastern Europe, Slovakia is currently taking advantage of its tax system. The corporate income tax set as well at 19%, is comparable with other economies in the region.

The effective tax rate on investments in Slovakia faced by private investors (which represents the combined impact of corporate income tax on profits and tax on dividends) is among the lowest for all developed nations.
In 2004-2008, annual GDP growth in Slovakia averaged 7.4%, however, in result of the global crisis the GDP is forecasted to decrease by 0.5% in 2009 just to start growing again in 2010 by 2.1%. One of the reasons of the shrinkage is high dependence of Slovakian economy on the automotive branch which is being particularly hit by the global slowdown. In recent years, the growth has been fostered by FDI that flowed into the country and amounting at EUR 9bn alone in the 2006-2008 period (mostly thanks to the automotive industry investment). Despite of being the manufacturing hub currently the Slovakian GDP is built mostly by the service sector, which is dominant in the country (64%). The economic growth for the future will mostly depend on the country successful adoption of Euro, which exchange rate to the Slovakian Koruna was set in the time when the latter was particularly strong (SKK 30.12 to EUR 1 compared with SKK 37.25 average rate for 2006, i.e. 20% lower) and standing of the companies that decided to invest in Slovakia in the 2000-2008 period.

In 2004 the unemployment rate reached the level of 14.3% and has been falling gradually since then halting at the level of 9.6% in 2008 and now is forecasted to increase again to 13% in 2009 and 12.9% in 2010.

The recorded inflation rate in Slovakia has amounted at 4.6% in 2008 an upsurge from 2.8% in 2007. The forecasts for 2009 and 2010 assume values of 2.1% and 2.9% respectively.

The biggest challenge ahead of the Slovakian economy is to stay competitive after the Euro adoption as the neighbouring economies of Poland, Czech Republic and Hungary staying outside the Eurozone has witnessed their currencies values loss amounting even at 38% for Poland (in the period between October 2008 and March 2009). One of the Slovakia advantages offsetting the comparative cost increase is the fact that the country has managed to keep wages low with the 2008 average amounting at EUR 723 compared with EUR 904 in Poland, EUR 944 in Czech Republic and EUR 799 in Hungary.

Social environment

Slovakia has a total of 5.4 million inhabitants and the population is slightly growing (2007). Despite the fact of belonging to smaller countries Slovakia is very rich on ethnical composition. It is mostly thanks to its multicultural past. At present Slovaks represent the majority of inhabitants (85.5%). The biggest ethnical minority is the Hungarian one (9%), who live in the southern part of the country, follow by Romani (Gypsy) 1.7%, Czech 0.8% and the other 2% (mainly Moravian, Silesian, Ruthenian, Ukrainian, German, Polish, Croatian, Turkish and Vietnamese). Slovak is the official language in Slovakia.
Slovakia is an urbanised country; approximately 56% of the population lives in towns or cities and this number is constantly growing over the past years. The capital city, Bratislava, has the strategic position in the closeness of Vienna and Budapest. Other important cities are Kosice, Zilina, Trnava, Presov and Nitra. The standard of living is much higher in the cities (especially in Bratislava) and regional differences are one of the country’s major problems.
The educational system includes primary schools, secondary schools and schools of higher education, that include universities. The majority of the schools are public or state schools, although since 1990 also private and church-owned schools exist. The literacy rate of Slovakia is at 99%, according to UN estimates.

Infrastructure and technological environment

The road network in Slovakia is composed of 43,029 km roads (except highways and expressways). As of December 2007, there were 328 km of highways and 135 km of expressways. According to the plan of Ministry of transport the total number of highways should reach 511 km by 2014 and it will connect all Slovakia from west to east part. The total number of international airports in Slovakia is 6 (Bratislava, Kosice, Zilina, Sliac, Poprad, Piestany). By far the most important one is in Bratislava.

The total amount of investment for 2008 reach the level of Euro 1.7bn, what was a rapid decrease in comparison to 2006, where the total Euro 4.6bn and 2007 level of EUR 2.7bn out of which more than 90% came from EU countries. This big difference has its reason in the huge investments of automotive giants KIA and Peugeot, who both started their production in Slovakia in 2006.

Political environment

After the Communist period (1948 – 1989), Czechoslovakia was separated into two different countries by the January 1, 1993.
Politics of Slovakia takes place in a framework of a parliamentary representative democratic republic, with a multi-party system. Executive power is exercised by the government led by the Prime Minister. The judiciary is independent of the executive and the legislature. The president is the head of the state and is elected by direct popular vote for a five-year term.
Current president of Slovakia is Ivan Gasparovic. Most executive power lies with the head of government, the prime minister, who is currently Robert Fico. His leading party Smer -Socialna demokracia (Direction – Social democracy) built after the last election in 2006 coalition with Slovak National Party and Movement for Democracy. Fico himself was strongly criticizing the economic reforms made by previous government of Mikulas Dzurinda during the campaign, but haven’t made any particular changes since his term.

The corruption perception index in Slovakia was 4.9 last year what was the best result in the history. On the other hand few cases happened after new government took over in 2006 are showing the risk of returning the time of period 1993-1998 where the state administration was highly corrupted.

Slovakia is administratively divided on three levels: regions (8), then districts (79) and eventually onto municipalities (above 2000).

General Data

Area: 49,036 sq km
Population: 5.4mn
Capital city: Bratislava
Language: Slovak (official language), however ca. 11% of the population speaks also Hungarian
Land boundaries: Poland 420 km, Ukraine 90 km, Hungary 676 km, Czech Republic 197 km, Austria 91 km


Major economic indicators

	2006	2007	2008	2009f	2010f
GDP (EUR bn)	44.5	54.8	64.8	68.1	71.7
Population (mn)	5.4	5.4	5.4	5.4	5.4
GDP per capita (EUR)	8,260	10,155	11,993	12,600	13,284
GDP (constant prices y-o-y %)	8.5	10.4	6.4	-0.5	2.1
Exports, real, y-o-y (%)	21.0	13.8	3.2	-7.1	2.7
Imports, real, y-o-y (%)	17.7	8.9	3.3	-6.4	2.7
CPI (average, y-o-y %)	4.5	2.8	4.6	2.1	2.9
Central bank reference rate	4.75	4.25	2.50	1.00	1.00
Monthly wage, nominal (EUR)	622	669	723	754	795
Unemployment rate (%)	13.3	11.0	9.6	13.0	12.9
Net FDI (EUR bn)	4.6	2.7	1.7	1.2	1.8
FDI % GDP	8.4	4.4	2.5	1.7	2.5
Exchange rate to USD AVG	29.65	24.64	21.27	23.22	22.91
Exchange rate to EUR AVG	37.25	33.78	31.29	30.13	30.13

Last update: Q2 2009

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: info@pmr-r.com