Slovakia: Investing in Slovakia
According to UNCTAD’s 2022 World Investment Report, Slovakia attracted only USD 59 million in foreign direct investment inflows in 2021. In the same year, the total stock of FDI stood at USD 59.3 billion, around 51.6% of GDP. 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 from 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 stood at almost USD 1.3 billion in the first half of 2022, compare with a negative inflow of USD 427 million recorded 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. Furthermore, as of 1 March 2023, Slovakia introduced an FDI screening mechanism that requires compulsory screening in the case of critical investments (energy, transportation, healthcare, chemicals, IT, military, digital services, media, news, etc.) or a voluntary screening for non-critical investments. For the legislation purpose, are considered foreign investors not only natural persons that are not nationals of an EU member State and legal persons without a seat or place of business in the EU, but also any other person (including Slovak legal persons) linked to any person of a third country as defined in the FDI Act. Overall, Slovakia has a good business climate and ranks 32nd out of 82 countries in the Economist Business Environment ranking. Moreover, the country ranks 46th out of 132 in the 2022 Global Innovation Index and 49th out of 180 in the Corruption Perception Index.
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: May 2023