What could bring Slovakia back down

Stephen Beard Nov 17, 2008

What could bring Slovakia back down

Stephen Beard Nov 17, 2008


Steve Chiotakis: The Velvet Revolution isn’t some rock band out of Europe. It’s more like a band of citizens who, in 1989, overthrew their government. That’s what Czechs and Slovakians are celebrating today. But as Stephen Beard reports from Bratislava, the worries today are about the economy, not about who’s in charge.

Stephen Beard: Slovakia has every reason to celebrate. Living standards are rising fast. Last year, the economy grew at the quickest rate of any developed country.

And within weeks, Slovakia takes a crucial step towards closer European integration:

[Sound of Slovakian song playing]

As this official song proclaims, Slovakia will adopt the Euro.

Reforms in the late 90’s revolutionized the economy. Lower taxes and more flexible labor laws attracted foreign investors. Once it was weighed down with heavy, inefficient industries.

Now, Slovakia is a manufacturing superstar. Volkswagen, Peugeot and KIA all set up state of the art factories here. They build more than half million cars a year. That makes Slovakia per capita the biggest car maker in the world. But that clearly could make this country vulnerable in the current crisis.

Analyst Radovan Durana:

If there is a serious downturn, demand for Slovak production will decrease and may lead to loss of jobs.

And there’s a another worry about the financial crisis — a fear that it could sour public support for economic reform.

[Sound of Slovakian men talking]

People in this open air-market blame American-style capitalism for the crisis. This man says Americans are the guilty ones. Who else causes so much trouble? While this man America’s wild capitalism shouldn’t be allowed.

Peter Kicina is head of the Slovakian Business Association. He says that Slovakia’s current left-leaning government could exploit this sentiment to curb the free market.

Peter Kicina: This could be serious threat for Slovakia in the future. We have now a government that could decrease the level of free market in Slovakia.

Already the government has tightened the labour code and made it tougher to fire workers. In spite of its phenomenal transformation, Slovakia may have peaked as a manufacturing paragon.

In Bratislava, this is Stephen Beard for Marketplace.

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