The most significant economic events in 1999, according to several analysts and economists contacted by The Slovak Spectator, were the second austerity package passed in May, the December EU summit in Helsinki which invited Slovakia to begin accession talks, and the lowering of the corporate income tax approved in November.
With responsible economic measures and a proven commitment to reform, especially in restructuring state companies, the Slovak government re-established trust abroad, analysts agreed. This goodwill, however, didn't translate into more foreign direct investment (FDI), which actually fell in 1999 from the previous year.
Martin Barto, head of strategy at the state-owned bank Slovenská Sporiteľňa, was most pleased by the reduction of the current account deficit and balance of payments.
Meanwhile, Ján Tóth, a senior analyst with the Dutch Investment bank ING Barings, and Ivan Chodák, an analyst with CA IB securities, considered the second austerity package the most important factor in 1999 for Slovakia's macro-economy.
"In general, I think that the current government was a bit hesitant this year," said Chodák. "However, the macro-economy in 1999 was better than had been expected."
Barto believed that the economy's negative and positive results balanced each other out. "We saw decline in GDP growth, but on the other hand exports increased," he said.
Foreign investors, clearly, adopted a wait and see approach to the Slovak economy in 1999. "Investment needs time because investors react to changes in the environment a bit slowly," said Barto. "We really couldn't expect big inflows this year because 1999 was only a preparatory year."
The results of the December 11-12 EU summit in Helsinki should help increase investment next year, but no analyst was willing to predict to what extent.
Tóth and Chodák agreed that FDI in 1999 had been a bit of a disappointment. "In FDI, I can't see anything significant other than the approval of the privatisation of Slovak Telecom," said Chodák.
To prepare for the privatisation of the remaining lucrative assets in state hands, a restructuring process at Slovak state banks and the corporate sector was also launched, and would start bearing fruit next year, analysts said. "In 1999, important processes having a significant impact on the state sector only just got started," said Barto.
The lesson learned according to Chodák was that "Slovak companies in 1999 came to the conclusion that survival without a partner is impossible."
