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Successfully investing in Slovakia

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​​​​last updated on 7 October 2025  | reading time approx. 4 minutes

   

    

   

How do you assess the current economic situation in Slovakia?

Despite ongoing uncertainty stemming from global and domestic challenges, the Slovak economy is projected to continue growing in 2025. Real GDP growth is expected to reach 2.1 percent, slightly down from 2.3 percent in 2024, mainly due to fiscal consolidation measures, including higher taxes and reduced public spending. Nonetheless, falling inflationary pressures and rising real wages are expected to support household consumption, sustaining domestic demand.

After peaking in 2023, inflation is expected to ease to around 5.1 percent in 2025, as energy prices stabilize, and wage growth continues. However, the removal of government energy subsidies and an increase in VAT to 23 percent contribute to sustained price pressures. Domestic production costs have remained relatively stable, aided by a more favorable energy market compared to previous years.

The key driver of economic growth remains the absorption of EU funds, which continue to finance public investment and infrastructure. On the external front, Slovakia’s export performance is supported by easing supply chain disruptions and lower commodity prices, though weaker demand from key trading partners like Germany may temper gains. 

In the labor market, unemployment has fallen to a historic low of 5.3 percent. However, demographic decline is constraining labor supply, prompting increased reliance on foreign workers to meet labor demand, especially in manufacturing and services. With the tight labor market persisting, Slovakia is expected to continue integrating foreign labor to support economic activity.

Geopolitical conflicts are the biggest threats in the forthcoming 12 months. In the long-term period, it will be also cybersecurity risks and climate changes. Companies need to be prepared for the Artificial intelligence (AI) development that seems to grow in the next years. 

How would you describe the investment climate in Slovakia? Which sectors offer the largest potential?

Slovakia will remain one of the most attractive investment destinations in Central Europe in 2025. In recent years, Slovakia has become one of the most popular destinations in the region. Hundreds of prominent investors (also from Germany) have chosen Slovakia as a suitable location, especially for the automotive industry. Despite geopolitical uncertainties and new global trade developments – such as the tariff adjustments introduced after the 2024 US presidential election – the investment climate in Slovakia remains stable and competitive.
 
Key factors attracting investors to Slovakia are:
  • Stable and investor-friendly environment,
  • Central geographical location within the EU economic growth,
  • The euro as the official currency,
  • Advancing digitalization and infrastructure development,
  • A skilled and productive workforce, 
  • High productivity.
 
Although the global economy is currently undergoing change due to protectionist tendencies (including higher US tariffs on European industrial goods), Slovakia continues to benefit from its close integration into the EU single market and stable trade relations within Europe.

The government is also planning fiscal and structural measures to further stimulate domestic demand and support key industries. Among the industries that have been developing most dynamically in the long-term mechanical engineering, electrical industry and, of course, the automotive industry (strengthened by the start of production at Volvo Cars in Košice)

What challenges do German companies face during their business ventures into Slovakia?

The general political situation in Slovakia is considered to be stable. According to the Credit Insurance Group Credendo, Slovakia is one of the safest and politically most stable countries in Europe. Slovakia has the lowest risk among EU countries, especially in the following categories: Risk of political unrest, Risk of state intervention in private property, Currency risk and Transfer risk. However, it should be noted that the Credit Insurance Group Credendo report was published shortly after the 2023 general election and before this year's presidential election.
    
Even before starting business in Slovakia, it should be taken into account that Slovak legislation differs in certain areas from the German system to some extent (e.g., labour law). Furthermore, (compared to Germany) relatively frequent changes in tax and legal regulations have been observed in Slovakia. The unemployment rate, which has been very low for years, represents one of the greatest challenges in Slovakia. In addition, the struggle of employers to attract qualified workers over many years has led in part to an increase in labour costs. During the pandemic, the pressure on labour costs eased somewhat, but is now increasing again.

  

What importance does Germany have for the Slovakian economy?

The political situation in Slovakia is expected to remain stable overall in 2025, although domestic political debate has intensified recently. The presidential election in spring 2024, which was won by a conservative candidate, brought certain changes to the political climate, for example in the rhetoric towards EU institutions and the direction of individual reform projects. Nevertheless, international agencies continue to rate Slovakia as one of the safest and most politically stable countries in Central and Eastern Europe. The risks of political unrest, interference with private property or currency risks remain low.

Even before starting business in Slovakia, it should be considered that Slovak legislation differs in certain areas from the German system to some extent (e.g., labor law). Furthermore, (compared to Germany) relatively frequent changes in tax and legal regulations have been observed in Slovakia. The unemployment rate, which has been very low for years, represents one of the greatest challenges in Slovakia. In addition, the struggle of employers to attract qualified workers over many years has led in part to an increase in labor costs. During the pandemic, the pressure on labor costs eased somewhat, but is now increasing again.

What importance does Germany have for the Slovakian economy?

Germany will remain Slovakia's most important economic partner in 2025. Around 2,400 companies with direct or indirect German capital participation are currently active on the Slovak market. Many of these are among the largest employers and have a decisive influence on the development of Slovak industry, particularly in the automotive and mechanical engineering sectors.

Slovakia continues to generate a trade surplus with Germany, despite the slight slowdown caused by new US tariffs and changes in global supply chains. Investments in renewable energies, heat pump technology and battery production are becoming increasingly important.​

In your opinion, how will Slovakia develop?
Slovakia is expected to remain an attractive location for investment in the coming years. The country's ability to adapt quickly to new economic conditions and technological trends is a key competitive advantage. However, structural reforms will be necessary for sustainable economic development:
  • Improvement of the education system with a stronger focus on practical training and digitalization,
  • Reduction of regional disparities and investment in disadvantaged regions,
  • Increased efficiency of public administration and legal certainty,
  • Targeted promotion of research, development and innovation.

The Slovak economy is also likely to receive a boost from the continued use of EU funds. 

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