Slovak Economic Development

 


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This article examines the present economic situation in Slovakia which is defined by specific factors: GDP (Gross Domestic Product), inflation, unemployment rate etc. Firstly, let’s clarify those economical terms. Gross Domestic Product is the value of all goods and services produced in a country during one year. The second macroeconomic indicator as well as macroeconomic problem is inflation. It occurs when quantity of money within economy increases faster than production showing itself in growth of prices. Unemployment is a problem and macroeconomic indicator as well. When a certain percentage of people that are considered to be a part of labor force, are willing to work but there are not jobs available in the market and therefore they cannot find a job. In Slovakia the inflation rate is around 4% which is hardly noticeable and has hardly if any impact on our everyday lives on short term basis. Unemployment might as well affect the entire economy in negative way.

When the rate reaches higher percentage than 25%, misallocations of production resources happens, resulting in downturn of the entire economy, inflation to skyrocket (prices to arise), and GDP to fall. These macroeconomic factors do strongly influence the economy. Independent Slovakia has experienced several percentile fluctuations of GDP, inflation, and unemployment. The development of each indicator and its impact will be analyzed in later sections. Inflation, GDP, and Unemployment are the most important indicators of economic development. Not only are they indicators they serve as name for an economic phenomenon. Each of them is affecting each other and each of them affecting the whole Slovak economy.

They provide us with useful information about countries economic state, whether it is a rich county, poor, or if it is worth of investing the money. In Slovak economy the macroeconomic indicators play significant role consisting of. Showing our economic progress, reflecting our economic gaps. The entire economy would be vague and insufficient lacking flexibility. They are truly influencing Slovak economy. If we have high GDP compared to the US it would influence our lives in the most positive way. Also, Inflation and Unemployment are mostly economic problems we need to deal with. They might as well influence our economy depending on their percentage. Slovakia has been largely influenced by macroeconomic phenomenon called inflation, GDP, and unemployment. Slovakia is now continuing the process of reforms but majority is already applied. It is also heading towards membership in the European Union. Political stability has been achieved. GDP is expected to grow by 4. 1% in 2003 (the highest GDP growth between V4 countries) due to foreign direct investment and membership in NATO, which will hopefully create jobs pushing unemployment down.

Inflation if NBS will not reduce the autonomous component of inflation or inflationary originated in administrative decision, and if there will be an external price shocks of significant size the inflation will increase. NBS will have to lower the inertia of the inflation process. This strategy might be good, since some major deregulatory steps are still ahead of us and the bang of exchange rate and price shocks caused by the external environment may prove to be quite significant. Otherwise Inflation is expected to rise since Slovakia is joining the EU to 9. 1% and then gradually declining in years to come. Unemployment is expected to be reduced, thanks to foreign investment. Entire outlook of Slovak economy is for the most part positive.

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