BRATISLAVA, September 20, (WEBNOVINY) — The introduction of the euro as Slovakia’s currency in 2009 did not cause any serious damage to Slovak companies. Behind a downswing they registered in their economic performance in 2009 is mainly attributable to lower foreign demand, suggests a research paper published in the latest issue of the central bank’s journal Biatec. Worsened price and cost competitiveness pertaining to the fixing of the exchange rate towards the euro was only temporary, according to the study ad there exists no direct evidence of exclusively negative impact of the euro introduction on some sectors. “Our findings indicate that the euro was rather a witness and not the culprit of a considerable y/y worsening of financial results of Slovakia’s companies,” writes the central bank’s journal.
In the period shortly before the euro switchover, Slovakia’s companies faced a dramatic fall in exports, industrial output and sales as well. The registered y/y drop in the interest of foreign tourists in accommodation in Slovakia was remarkably deeper than in other EU countries. Registered was also increased interest of Slovak citizens in shopping abroad. A drop in production, exports and subsequently also in added value was comparable with the EU average. Slovak companies however relatively more visibly decreased prices and implemented job cuts, which enabled them to reach one of the lower rates of a decrease in investments and maintain good preconditions for further improvement of competitiveness.
The paper suggests that preconditions for quick adjustment and growing competitiveness are relatively good in Slovakia. The tradable sector represented mainly by the industrial production appears to be sufficiently competitive. Companies appear to be flexible and prefer a rise in productivity while they do not exclusively concentrate on cost cuts. Firms in Slovakia perceive the need to invest in development and research, increase innovative activities and support education of employees.
However despite all this Slovakia is not able to compete internationally mainly in the chemical branch and is still considerably lagging behind in hi-tech exports. “In line with the trend observed in developed countries, Slovak companies should concentrate more on exports to quickly developing Asian countries,“ writes the report.
SITA
