The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.
Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.
These statements highlight persistent barriers to further U.S. investment. Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy. To access the 2022 Slovakia ICS, visit the U.S. Department of State Investment Climate Statement website. The executive summary of the 2023 Investment Climate Statement is below.
2023 Investment Climate Statement Executive Summary
Slovakia has a small, open, export-oriented economy and a population of 5.45 million people. It joined the EU and NATO in 2004 and the Eurozone in 2009. Slovakia is an attractive destination for foreign direct investment (FDI), with a favorable geographic location in the heart of Europe and a skilled workforce. Government authorities generally encourage and display a positive attitude towards FDI. The current ruling coalition, which took power in March 2020 and continued its work in an interim capacity following a no-confidence vote in December 2022, has implemented a range of measures to improve the investment and business climate.
The Slovak economy grew by 1.7 percent in 2022, slowed by persisting supply-chain shortages related to the COVID-19 pandemic, and Russia’s full-scale invasion of neighboring Ukraine with associated inflation and energy crises. As a heavily industrialized and energy-intensive economy, Slovakia was particularly affected by surging prices and uncertainty on the energy markets. In response to the energy crisis, the Slovak government took unprecedented steps to reduce the country’s legacy dependence on Russian primary energy imports, and in 2023 set aside €3.4 billion (2.8 percent of GDP) to offset ballooning energy costs. Record-high energy prices and quickly growing food prices drove headline inflation in Slovakia to 22-year highs in 2022 at 12.8 percent year-over-year.
Attracting higher value-added investment is a priority for the current ruling coalition, as well as attracting investment in less-developed regions of Slovakia. The government made important progress in implementing the national Recovery and Resilience Plan, which presents a roadmap for spending €6.3 billion in EU grants by 2026 on key reforms and investments in the areas of green economy, education and research, healthcare, digitization, and rule of law. The government also launched implementation of EU Structural and Investment Funds in the 2021 – 2027 programing period, in which Slovakia received an allocation of €13.6 billion for investments into energy and the environment, research and innovation, infrastructure, and social capital. Inefficiencies hindering access to EU funds persist, however. Slovakia’s government continued its anti-corruption agenda and measures in 2022, resulting in an improvement in the business community’s perception of corruption’s impact on the business environment.
Slovakia remains the largest per capita car producer in the world, with four established car-manufacturers, an additional international automaker announcing plans to open a plant, and hundreds of suppliers. Manufacturing industries, including automotive; machinery and transport equipment; metallurgy; electronics; chemicals; and pharmaceuticals remain attractive and have the potential for further growth. Due to the government’s focus on reducing dependence on Russian energy imports and growing demand from consumers, green energy production, energy efficiency products, and diversely sourced fossil-based and nuclear fuels are also sectors with potential.
Positive aspects of the Slovak investment climate include:
- Membership in the EU and the Eurozone
- An open, export-oriented economy close to western European markets
- Investment incentives, including for foreign investors
- A low-carbon energy mix
- A sound banking sector deeply integrated with Europe
Challenging aspects of the Slovak investment climate include:
- Legacy dependence on Russian primary energy imports
- High sensitivity to regional economic developments
- Weak public administration and an inefficient judiciary
- Significant regional disparities, suboptimal national transport network
- Relatively low rates of public and private R&D investment
- Heavy reliance on EU structural funds, chronic deficiencies in allocation of funds
- Tax rates above the regional average