Slovakia: Investing in Slovakia
According to the latest data published by the OECD, FDI inflows went from USD -8.29 billion in the first half of 2020 to USD -4.03 billion in the same period for 2021. The 2008-2009 fall in international investment and the subsequent Eurozone crisis have had an impact on Slovakia and continue to weigh on foreign investment flows bound for the country. This was compounded by the negative effect of the pandemic. Given that a very large share of Slovakia's FDI directly depends on the Eurozone, the country is dependent on the economic health of its European neighbours, especially Germany and France, and is sensitive to regional tensions (the Russia-Ukraine conflict). According to data by OECD, the main investing countries in Slovakia are the Netherlands, Czech Republic, Austria and Germany. As per sectors of activity, manufacturing and industrial production, financial and insurance services, wholesale and retail are those that attract the most investments. The latest figures from OECD show that FDI inflows were negative by USD 403 million in the first half of 2021, compared to an outflow of USD 213 million registered in the same period one year earlier.
Slovakia is an attractive FDI destination due to a relatively low-cost yet skilled labour force, and a favourable geographic location in the heart of Central Europe. However, some regions have failed to attract major investment, which has aggravated regional disparities in many economic and social areas. The overall outlook for public and private investment is favourable, but the ongoing global crisis may pose some risks (especially for the manufacturing sector, which attracts most of FDIs to the country). Recent increases in corporate taxes, changes to the Labour Code, slow dispute resolution as well as recurring corruption issues are the factors that can undermine the attractiveness of the Slovak market. Slovakia ranks 45th out of 190 economies in terms of ease of doing business, according to the latest Doing Business report by the World Bank (losing three positions compared to the previous year). In March 2021, Slovakia introduced an investment screening mechanism whereby any acquisition of more than 10% of shares or voting rights in a critical infrastructure operation can be reviewed for possible disruption of public order or national security. The governmental power to block acquisitions applies to a list of sectors that includes transport, ICT, energy, mining, postal services, pharmaceuticals and chemicals, metallurgy, health care, water, finance and agriculture (UNCTAD, 2021).
Foreign Direct Investment | 2019 | 2020 | 2021 |
FDI Inward Flow (million USD) | 2,511 | -1,931 | 59 |
FDI Stock (million USD) | 60,604 | 64,237 | 59,367 |
Number of Greenfield Investments* | 43 | 26 | 46 |
Value of Greenfield Investments (million USD) | 2,017 | 2,274 | 2,867 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Slovakia | Eastern Europe & Central Asia | United States | Germany |
Index of Transaction Transparency* | 3.0 | 7.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 4.0 | 5.0 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 7.0 | 6.8 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
The main assets of the country are:
The main weak points of the country are:
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Latest Update: January 2023