2021 Index of Economic Freedom

Slovak Republic

OVERALL SCORE66.3
WORLD RANK61
Rule of Law

Property Rights71.5

Judicial Effectiveness44.4

Government Integrity48.8

Government Size

Tax Burden78.4

Government Spending47.0

Fiscal Health93.4

Regulatory Efficiency

Business Freedom55.6

Labor Freedom52.2

Monetary Freedom74.8

Open Markets

Trade Freedom84.0

Investment Freedom75.0

Financial Freedom70.0

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Quick Facts
  • Population:
    • 5.5 million
  • GDP (PPP):
    • $198.4 billion
    • 2.3% growth
    • 3.3% 5-year compound annual growth
    • $34,178 per capita
  • Unemployment:
    • 5.6%
  • Inflation (CPI):
    • 2.8%
  • FDI Inflow:
    • $2.4 billion

Slovakia’s economic freedom score is 66.3, making its economy the 61st freest in the 2021 Index. Its overall score has decreased by 0.5 point, primarily because of a decline in the score for government spending. Slovakia is ranked 33rd among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

The Slovakian economy remained in the ranks of the moderately free this year, but its score has declined. Reversing course toward greater economic freedom would require significant reform of the judicial system as well as reining in spending and removing rigidities in the labor market. Given its anticorruption mandate, hopes are high that the new administration will strengthen the integrity of the government.

IMPACT OF COVID-19: As of December 1, 2020, 868 deaths had been attributed to the pandemic in Slovakia, and the economy was forecast to contract by 7.1 percent for the year.

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Background

After it gained independence from the former Czechoslovakia in 1993, market reforms made Slovakia one of Europe’s rising economic stars. It entered the European Union and NATO in 2004 and the eurozone in 2009. Since the February 2020 elections, Prime Minister Igor Matovic of the anticorruption Ordinary People and Independent Personalities Party has led a four-party center-right coalition. The murder of a journalist who was investigating tax fraud by the nation’s elite led to massive anticorruption protests and the 2018 resignation of longtime Prime Minister Robert Fico, whose center-left Smer party had long dominated Slovakian politics. Slovakia’s first female president, independent Zuzana Caputová, was elected in May 2019. The country’s small, open economy is driven mainly by exports of automobiles and electronics.

Rule of LawView Methodology

Property Rights 71.5 Create a Graph using this measurement

Judicial Effectiveness 44.4 Create a Graph using this measurement

Government Integrity 48.8 Create a Graph using this measurement

The legal framework recognizes and enforces property and contractual rights. National cadaster data indicate that less than 10 percent of land has clear title. The judiciary is constitutionally independent, but judges are vulnerable to political pressure, corruption, and intimidation. Legal decisions can take years. Corruption remains a problem throughout the bloated and nontransparent bureaucracy, especially in public procurement.

Government SizeView Methodology

The top individual income tax rate is 25 percent, and the top corporate tax rate is 21 percent. Other taxes include value-added and property taxes. The overall tax burden equals 33.1 percent of total domestic income. Government spending has amounted to 42.0 percent of total output (GDP) over the past three years, and budget deficits have averaged 1.1 percent of GDP. Public debt is equivalent to 48.2 percent of GDP.

Regulatory EfficiencyView Methodology

Slovakia has abolished the requirement that information on tax arrears be obtained and submitted when starting a business. Wage premiums for work performed during days of weekly rest and at night, however, have been increased. Automobile and electronics exports account for more than 80 percent of GDP. The government’s 2020 budget included subsidies equal to about 1.2 percent of GDP.

Open MarketsView Methodology

As a member of the EU, Slovakia has 45 preferential trade agreements in force. The trade-weighted average tariff rate (common among EU members) is 3 percent, with 639 EU-mandated nontariff measures in force. Slovakia has an additional 44 country-specific nontariff barriers. Openness to foreign investment has aided Slovakia’s transition to a more market-based system. About 90 percent of adult Slovaks have a formal bank account.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland81.9-0.1
2Ireland81.40.5
3United Kingdom78.4-0.9
4Estonia78.20.5
5Denmark77.8-0.5
6Iceland77.40.3
7Georgia77.20.1
8Lithuania76.90.2
9Netherlands76.8-0.2
10Finland76.10.4
11Luxembourg760.2
12Sweden74.7-0.2
13Austria73.90.6
14Czech Republic73.8-1.0
15Norway73.40.0
16Germany72.5-1.0
17Latvia72.30.4
18Armenia71.91.3
19Cyprus71.41.3
20Bulgaria70.40.2
21Malta70.20.7
22Belgium70.11.2
23Azerbaijan70.10.8
24Spain69.93.0
25Poland69.70.6
26Romania69.5-0.2
27North Macedonia68.6-0.9
28Slovenia68.30.5
29Portugal67.50.5
30Serbia 67.21.2
31Hungary67.20.8
32Kosovo66.5-0.9
33Slovak Republic66.3-0.5
34France65.7-0.3
35Albania65.2-1.7
36Italy64.91.1
37Turkey64-0.4
38Croatia63.61.4
39Montenegro63.41.9
40Bosnia and Herzegovina62.90.3
41Moldova62.50.5
42Russia61.50.5
43Belarus61-0.7
44Greece60.91.0
45Ukraine56.21.3
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