Growth is expected to accelerate further in 2015 and 2016, by 2.8% and 3.5% respectively, driven by continued robust domestic demand and increasing exports to the Eurozone.
Central, Eastern and South Eastern European economies
Czech Republic: 3 (Moderate-Low Risk) - Stable
Hungary: 5 (Moderate Risk) - Positive
Poland: 3 (Moderate-Low Risk) - Negative
Slovakia: 3 (Moderate-Low Risk) - Stable
Turkey: 5 (Moderate Risk) – Stable
* The STAR rating runs on a scale from 1 to 10, where 1 represents the lowest risk and 10 the highest risk. The 10 rating steps are aggregated into five broad categories to facilitate their interpretation in terms of credit quality. Starting from the most benign part of the quality spectrum, these categories range from ‘Low Risk’, ‘Moderate-Low Risk’, ‘Moderate Risk’, ‘Moderate-High Risk’ to ‘High Risk’, with a separate grade reserved for ‘Very High Risk.’ In addition to the 10-point scale, rating modifiers are associated with each scale step: ‘Positive’, ‘Stable’, and ‘Negative’. These rating modifiers allow further granularity and differentiate more finely between countries in terms of risk. For further information about the Atradius STAR rating, please click here.
Slovakia
Political situation
Head of state: President Andrej Kiska (since June 2014)
Head of government: Prime Minister Robert Fico (since April 2012)
Population: 5.4 million
Smer-SD party rules with absolute majority
Since April 2012 Slovakia is ruled by the social-democratic Smer-SD party, which gained 83 of the 150 seats in parliament in the March 2012 elections. Next general elections are due to be held in 2016.
Economic situation
Broad-based economic growth forecast in 2015 and 2016
The Slovak economy grew 2.4% in 2014, driven by consumer spending and business investment, government consumption and net exports. Growth is expected to accelerate further in 2015 and 2016, by 2.8% and 3.5% respectively, driven by continued robust domestic demand and increasing exports to the Eurozone. Private consumption is forecast to continue to be one of the primary drivers of the economic expansion.
The labour market shows strong improvement, with the unemployment rate expected to decrease from 14.2% in 2013 to 11.7% in 2015 and 10.9% in 2016, mainly due to improving domestic economic conditions. This jobless rate would then be on par with the Eurozone unemployment rate.
Slovakia´s external economic position is solid. Exports and imports are well balanced and both growing. The current account surplus decreased to 0.1% of GDP in 2014, but is expected to stabilise and remain positive in the coming years. At the same time the level of Slovakia´s foreign debt is low.
Government finances are stable with the budget deficit being kept below 3% of GDP since 2013. The budget deficit is expected to decrease to 2.4% in 2015 and 1.6% in 2016. Long term government bond yields have decreased rapidly over the past three years, reducing debt servicing costs for the government. Therefore the government debt level is expected to stabilise at 57% of GDP in 2015, before starting to decrease in the coming years.
