3. Total stock of FDI / GDP comparable to other CEE countries
120
FDI STOCK (% of GDP, 2009)
100
80
60
40
20
0
PL RO SK CZ HU BG
Total stock of FDI in Slovakia at 58% of GDP i.e. foreign investments worth almost EUR 35 bn came into
Slovakia over the last twenty years
Source: Eurostat
3
4. Slovakia has a strong record in attracting FDI
18,0%
16,9%
FDI (% GDP)
16,0%
14,0%
12,0%
10,0%
8,4%
8,0%
6,9%
6,0%
5,1% 4,8% 5,0%
???
4,0%
2,5%
1,7%
2,0%
0,6% 0,9%
-0,1%
0,0%
-2,0%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1H
2011A
Due to a favorable relationship between labor cost and productivity,
Slovakia has a strong record of attracting FDI
Recent slow-down in FDI inflow to be addressed via reform efforts
Source: UniCredit Bank, EUROSTAT, NBS
4
5. Manufacturing and financial sector attracted most FDI
FDI stock by sectors (bn. EUR, 2008)
3,5
14
3
2,5
12
2
1,5
10
1
8 0,5
0
Transport Basic Refinery Machinery Chemicals Food Plast & Wood & Electrical Textile Other man.
6 eq. metals Rubber Priniting eq.
4
2
0
Financial Interm.
Manufacturing
Hotels & Rest.
Business Services
Communication
Construction
Agriculture
Utilities
Other Services
Real Estate
Transport&Storage
Mining
Trade
5
6. Apart from NL, Germany and Austria invested most
Other
FDI by country (bn. EUR, 2009, stock) 17,7% NL
9 FR 27,7%
3,2%
8 CY
3,4%
7 IT
5,7%
6
CZ
5,9% DE
5 HU 15,5%
6,5% AT
4 14,4%
3
2
1
0
NL DE AT HU CZ IT CY FR BE LU KR US GB BR CH Other
6
7. Will Slovakia remain competitive in the medium-term ?
Three main reasons why the answer is YES:
Sound macroeconomic environment
Strong micro-foundations of the economy
Reasonable likelihood of continued reform efforts
7
9. Slovakia a top growth performer of the past decade
Index 2000=100 CAGR 2000-2010
Slovakia 159,7 4,8%
Lithuania 153,3 4,4%
Romania 149,2 4,1%
Bulgaria 148,8 4,1%
Poland 146,4 3,9%
Estonia 145,9 3,8%
Latvia 143,2 3,7%
Czech Republic 136,9 3,2%
Luxembourg 135,1 3,1%
Cyprus 132,1 2,8%
Due to structural reforms and forces of convergence, Slovak economy
was the fastest growing one in the EU(27) in the past decade with the
average annual growth rate of 4.8%
Source: UniCredit Bank, EUROSTAT
9
10. Macroeconomic outlook is positive
UniCredit Bank ako č Chapter Section Title
UniCrChapter Title – len skupiny UniCredit
2010 2011 2012 2013 2014 2015 2016
GDP bn EUR 65,9 69,0 71,2 74,8 79,8 85,3 91,0
GDP real growth, % 4,2% 2,9% 1,9% 3,4% 4,7% 4,6% 4,5%
CPI avg, % 1,0% 3,9% 2,5% 3,0% 3,3% 3,5% 3,5%
Unemployment avg, % 14,4% 13,3% 13,4% 13,2% 12,6% 12,2% 12,1%
Government debt, % GDP 41,0% 44,2% 47,6% 48,2% 48,1% 48,1% 47,0%
Current Account, % GDP -3,5% -1,4% -0,9% -0,8% -0,8% -0,7% -0,7%
This year the economy will grow by about 2.9%
After a slowdown in 2H11 and 2012, the economy should
accelerate to about 3-4% annual growth
Slovakia poised to grow much faster than most Eurozone
countries
Source: UniCredit Bank, EUROSTAT, NBS, SO SR
10
11. Slovakia compares favourably in gov debt/ GDP (%)
UniCredit Bank ako č Chapter Section Title
UniCrChapter Title – len skupiny UniCredit
160
143
Government debt (2010, % GDP)
140
119
120
97
96
100
93
85
83
82
80
80
80
80
72
68
63
61
55
60
60
48
45
44
41
40
39
38
38
40
31
18
16
20
7
0
CY
IT
HU
RO
SI
FI
EU27
LT
CZ
MT
AT
PT
NL
UK
IE
LU
FR
GR
BG
PL
EA17
EE
SE
SK
DK
LV
ES
DE
BE
In the current difficult market environment, the markets look
particularly favorably on a low government indebtedness
Slovakia’s government debt to GDP is well below 60%
Source: UniCredit Bank, EUROSTAT
11
12. Slovakia enjoys a good standing on the financial markets
UniCredit Bank ako č Chapter Section Title
UniCrChapter Title – len skupiny UniCredit
2500
2000
1500
1000
500
0
GR PT IE IT ES SK
Compared to PIIGS countries Slovakia commands much lower
spread vis-à-vis German bunds
This testifies to a relatively favorable risk profile of the country
Source: UniCredit Bank, Bloomberg
12
13. Fiscal consolidation program
2008 2009 2010 2011 2012 2013 2014
Government deficit (% GDP) -2,1 -8 -7,9 -5,1 -4,7 -2,9 -3
Government Debt (% GDP) 27,8 35,4 41,0 44,2 47,6 48,2 48,1
After two years of overspending (2009-10), the current and any
future government likely to undertake fiscal consolidation
The main objective is to bring public finance deficit below 3%
GDP in 2013
A new constitutional law should introduce a debt ceiling of
60/50% GDP and an independent fiscal council
The new law should reduce a room for future fiscal excesses
Source: UniCredit Bank, MF SR
13
15. Favorable relationship between labor cost and productivity
70
61
60
50 50%
40
tis. EUR
35
31
30
64%
20
13
10
0
DE SK DE SK
Labour costs Labour productivity
Slovakia is a fundamentally attractive place to invest – Slovak
workers are relatively productive (50% GER) but cost little (36% of
GER)
Note: Labour costs – compensations per employee, Labour productivity – GDP per employment
Source: UniCredit Bank, EUROSTAT
15
16. Slovakia has a competitive labor code
Employment protection index - OECD 2008
4,0
3,5
Stricter regulations
3,0
2,5
OECD average - 2008
2,0
1,5
1,0
0,5
0,0
G R
LU X
S
-n K
K ON
SK N R
PRA
R
H L
AU L
C A
G N
SWw
C N
BEA
N U
FRC
JP L
D L
BR
CHN
E
-2 LD
TU X
T
ES T
SK D E
POE
M P
AU L
1
IR
IS
Z
01
S
N
E
IT
O
Z
U
R
FI
A
E
o
N
U
After a reform of the labor code in 2011, Slovakia has top 10
most competitive labor codes in OECD
Source: UniCredit Bank, MF SR
16
17. All-in labor costs still relatively competitive
3 500
2918
3 000
2 500
2 000
1 500
1277
1022 1061
891
1 000
648
500 423
0
BG RO PL HU SK CZ DE
In the run-up to the euro, labor costs increased in Slovakia but
still largely competitive with Hungary and the Czech Republic,
much less than in Germany
Note: Labour costs – compensations per employee
Source: UniCredit Bank, Eurostat
17
19. Slovakia has a track-record of being a reformist country
Fiscal consolidation – necessary to bring the public finance on a sustainable
footing
Labor code – to increase labor market flexibility
Pension reform – parametric changes to make it automatically immune to
worsening demographic outlook
Project Singapore – complex program to improve the business environment
Knowledge-based economy – any government should make progress here
19
