In the ranking of the largest non-financial companies in Slovakia, the German company Volkswagen Slovakia secured the top position for the past year. (source: TASR/DPA)
A recent AHK World Business Outlook survey of 76 German companies in Slovakia paints a worrying picture for businesses, highlighting the country’s economic policy framework, escalating labour costs, and unpredictable demand as the top risks to their operations.
German companies contribute the second-highest share of tax revenues among Slovakia’s 300 largest companies, according to an analysis by tax consultancy BMB Partners for 2023. In that year, these companies paid approximately €700 million in corporate income tax. When social and health insurance contributions are added, the total rises to €1.63 billion.
More than half of the surveyed companies, 55 percent, rate their current economic situation as satisfactory, while 29 percent describe it as good and 16 percent as poor.
However, when it comes to future business developments, expectations are mixed: 22 percent anticipate improvement, while 29 percent fear deterioration. Conversely, the outlook for economic growth is far more pessimistic, with 62 percent predicting a worsening overall economic situation in Slovakia, while only 5 percent foresee growth.
“This discrepancy suggests that while companies remain cautiously optimistic about their own business prospects, they are much more sceptical about macroeconomic conditions,” explains Peter Lazar, president of the German-Slovak Chamber of Commerce (AHK Slovakia).
At the same time, investment intentions and employment growth have both waned.
Investment willingness appears limited, with 42 percent of companies planning to reduce their investments, and just 14 percent intending to increase them. Employment trends are also subdued, with three in ten companies expecting a reduction in their workforce, while only two in ten plan to expand it.
“The decline in investment appetite reflects the current concerns of many companies operating in Slovakia. Without stable regulatory conditions, it is difficult for firms to plan long-term investments and expand their capacities,” Lazar adds.
Compared to the previous year, there has been a shift in risk assessment: 69 percent of respondents now consider the regulatory framework of economic policy to be the biggest business risk, followed by rising labour costs (66 percent) and uncertain demand (63 percent).
