I've been asked by many - "how is the 'world wide economic crisis' touching Slovakia?" Well, we are feeling it, but I don't think in the same way as all of you in the States. Presently I'm blogging from raining and cold California. I had hoped to be blogging from sunny & warm California..but that is another story. Anyways, the media here and word on the street has a lot to do with the economic crunch. Fact? Fiction? Urban legend? I have no idea. Anyways, in Slovakia it is being felt, but I don't believe it is pressing as strongly upon the minds and hearts of people here (...there). I read a recent report by Forbes which could explain why... read, get informed, enjoy....Slovakia: Fastest-Growing E.U. Economy Slowing Down
Oxford Analytica, 12.16.08, 06:00 AM EST
Economic reforms and European Union membership have generated an investment boom in Slovakia's manufacturing, construction and service sectors. Gross domestic product growth peaked at 10.4% in 2007 as new automobile and electronic plants started full-scale production.
However, Slovakia's performance is tied closely to E.U. demand for its exports, and the slowdown in E.U. growth is starting to be felt in Slovakia. The Statistical Office reported GDP growth in the third quarter slowing to 7% year-on-year after 9.3% and 7.6% in the first and second quarters, respectively. The government estimates that the economy will grow by 4.7% in 2009, with export growth slowing from 10% in 2008 to 5.9%. Recent data do not yet fully reflect the impact of the crisis, and some fear that growth could slow below 4%.
Prime Minister Robert Fico argues that higher domestic consumption will help Slovakia get through the crisis and perhaps reverse disturbing trends in employment. Accordingly, the government has drafted a package of new economic measures to stimulate demand. These include completing a nuclear power station on the Bohunice site and using public-private partnerships to build new roads and expand Bratislava's Stefanik airport. The government also seeks to reform the labor market and provide loans to small and medium-sized enterprises.
Meanwhile, Standard & Poor's 500 and Moody's have upgraded Slovakia's sovereign rating from A to A+. They cite Slovakia's modest debt burden, investment-oriented policies and the switch to the euro in January 2009.
Critics have argued that Slovakia is needlessly surrendering control over monetary policy and setting itself up for high inflation due to the switch-over. However, the timing for euro adoption now looks fortunate:
--The drive for the euro has meant long-term fiscal frugality and restrained the spending desires of Slovakia's left-leaning government.
--Slovakia's relatively low fiscal deficit of 2.25% of GDP in 2008 has reduced its need to borrow during the global financial crisis.
