Slovakia: part of Europe worth seeing

By Olga Pavuk

The Slovak Republic Embassy in the Baltic states situated in Latvian capital city has already been working for more than three years. During that time a trade turnover with the Baltic countries has doubled.

Embassy’s Commercial and Economic Department in Riga headed by Viktor Borecky provided a good impetus in order to increase Baltic states’ economic co-operation and development.

Old nation – young state

Slovakia is one of the youngest states in Europe, i.e. it’s ten years since it has become an independent state. With a population of 5.4 millions it could be compared with the number of population of the Baltic states. And life standards are almost similar, i.e. prices of food, services, real estates; although incomes and pensions are a little bit higher, than in Latvia, Lithuania, or Estonia. Besides Slovakia, like Baltic states, has identical priorities in foreign policy, i.e. full membership in the European Union and in NATO.

Slovakia and the Baltic have many similarities in the past when these beautiful countries were ruled by other nations for a long time. After gaining their independence, these countries are waiting passionately to join the EU, with great interest watching their neighbours’ situation.    

Free market economy

The Slovak economy is already an open economy oriented to foreign markets.  However, not so long ago the picture was quite different, i.e. basic import items were produced with the energy and raw resources from Russia, which made the trade balance negative. Thanks to trade with other countries, the situation has changed since May 2003 and Slovakia has reached positive trade balance. Germany, followed by the Czech Republic, Italy, Russia and Austria, are Slovak’s main trade partners with a quarter in the whole country’s trade turnover. Lithuania follows in the 35th place, Latvia – 41st, Estonia – 66th in the list of the trade partners.

Direction of goods from Slovakia to the Baltic states is much more dynamic than the other way around. There are two main reasons for it, according to Mr. Viktor Borecky. “First of all the Slovak entrepreneurs are more active and secondly, due to the fact that Slovak Republic’s Embassy is located in Riga, almost in the heart of the three Baltic states. Although Estonia, Latvia and Lithuania’ Embassies accredited in Slovak Republic have been situated in Vienna.

However the volume of foreign trade is constantly growing. There are several joint ventures companies in Slovakia with Baltic businessmen. It is very important for entrepreneurs to have particular and detailed information about economic co-operation possibilities from the first hand, which is exactly Embassy’s Commercial Department duty. 

The paths of trade

Paper and paper products (17.3% of total export), refrigerators and washing machines (15.7%), plastic materials (9.3%), bottle lids and chemicals are the main export commodities from Slovakia to Lithuania. Slovakia’s imports from Lithuania consists of refrigerators’ spare parts (25% of import) because in 2002 Lithuanian company Snaige bought Slovak refrigerators’ producer company Calex from the city of Zlate Moravce. Besides, Slovakia imports from Lithuania electric equipment (29.4%), plastic materials (8.1%) and synthetic fabrics (3.8%).

Estonia exported from Slovakia electric lamps (17.1%), chemicals (11.2 %) and toilet paper (9.7%) and imported to Slovakia mainly fish and fish-products (42.6%) and plywood (35.1%).

Similar situation is in the field of Latvian export to Slovakia. Main commodities there are: wood and wooden products, in smaller volumes fish products, e.g. all together in 2002 for about 7.5 million USD. The biggest part of Slovak’s export to Latvia consists of raw materials for Rhodia’s Industrial Yarn Company (its production takes place in the former chemical Daugavpils factory). The company has worked in Latvia since May 2000, and employed 170 workers. Rhodia’s company in Daugavpils belongs to French owner, but the management comes from Slovakia, as Rhodia has its other plant in Slovakia, from which Latvian factory imports granulated polyamides further processed in Daugavpils for yarns.

Other commodities exported from Slovakia to Latvia, e.g. Volkswagen-model cars, produced in Bratislava, pharmaceuticals and drugs, food stuff, beer, mineral water, paper products, shoes, PC monitors and video recorders produced in Slovakia. Volkswagen put big investments into Slovak factory and started VW Passat-type cars’ production a few years ago. This year Volkswagen in Bratislava has started producing VW Touareg and Porsche Cayenne-type cars. In 2003 a new big factory construction near Trnava (town about 50 km north-east of Bratislava) has been started which will produce Peugeot and Citroen cars. The huge metallurgical factory with American investments is situated in Eastern Slovakia, less industrially developed part of the country.

Agrarian’s expert opinion

Keeping in mind Borecky’s agricultural background, it is completely natural that BC was interested in his opinion as to Slovakia’s agricultural future in the EU. “I see it as a very complex problem, as the EU policy can vary very much in the future and could be different from conditions that we can see today. I mean the common agricultural policy and how funds in this sector would be used. Some think that there is a need to give money for agricultural development. I believe that there is a need to give some funds to those who decided to stop agricultural production and starts, for example, agro-tourism. I believe we need to stop overproduction in the EU to make the internal market vital and competitive,” concludes Mr. Borecky.  

Today agricultural sector’s share in national GDP has been reduced to 4.6%, ten years ago the figure was about 11%. We can compare the number of employees in agriculture sector, i.e. in 1989 there were 350 thousand people and in 2001 the number decreased to 74 thousand people working in this sector. Rural inhabitants transformed themselves to work in commercial and service sectors.

Unemployment can be lower

There is a rather high level of unemployment in Slovakia, i.e. official figures are higher than in the Baltic. In 2001 unemployment reached 19%, and presently it’s about 14%. Comparing Bratislava region with its 3% unemployment to Eastern Slovakia with 20%, we can say that the picture is very similar to the situation in Latvia. “The problem is not only in the shortage of working places, as Borecky thinks, but also in small differences between minimal wages (approx. 100 Euro) and subsidies for unemployed (approx. 60 euro). Therefore lots of unemployed people would rather stay at home which is easier than to work all the day and to spend money for transport and clothing at the same time.”

Ski tourism

Slovakia is a beautiful country in the part of Europe, which is well-worth visiting. Experienced travellers’ claim that Slovakia lacks only sea to become an internationally attractive tourists’ place. It is a modern state with the rich and colourful history. Roman Empire’s northern border crossed the country right in the centre. Today the same division remains only dividing country’s vineyards producing good wines.

One of the main attractions offered to foreign guests is ski tourism. There are magnificent High Tatras’ mountains touching beautiful skies in Slovakia’s northern regions. There are many possibilities for family holidays in Tatry.

Foreign trade development between Slovakia and Baltic states
Latvia
In mil. USD	1994	1995	1996	1997	1998	1999	2000	2001	2002
Export from Slovakia	3,6	4,8	7,7	13,8	11,5	8,7	20,0	22,0	24,8
Import to Slovakia	1,0	1,2	2,7	2,7	3,5	6,2	5,4	8,6	7,5
Turnover	4,6	6,0	10,4	16,5	15,0	14.9	25,4	30,6	32,3
Balance	+2,6	+3,6	+5,0	+11,2	+8,0	+2,5	+14,6	+13,4	+17,3
Lithuania
in mil. USD	1994	1995	1996	1997	1998	1999	2000	2001	2002
Export from Slovakia	8,2	2,4	25,8	22,5	22,6	17,6	17,6	25,5	39,6
Import to Slovakia	2,9	2,4	2,5	1,3	2,9	3,1	3,7	4,9	8,4
Turnover	1,1	4,8	28,3	23,8	25,5	20,7	21,3	30,0	48,0
Balance	5,3	0,0	23,3	21,2	19, 7	14,5	13,9	20,6	31,2
Estonia
In mil. USD	1994	1995	1996	1997	1998	1999	2000	2001	2002
Export from Slovakia	1,7	3,7	5,9	11,8	5,5	2,7	4,0	4,8	5,6
Import to Slovakia	1,4	1,3	0,7	0,7	1,0	1,1	3,4	2,3	2,8
Turnover	3,1	5,0	6,6	12,5	6,5	3,8	7,4	7,1	8,4
Balance	0,3	2,4	5,2	11,1	4,5	1,6	0,6	2,5	2,8
Source: Slovak Republic Embassy’s Commercial and Economic Department in Riga.