Slovakia’s economy has become more complex

The more complex a country’s economy is, the more it is able to face trade wars and crises affecting individual sectors.

Groupe PSA Slovakia plant in Trnava.Groupe PSA Slovakia plant in Trnava. (Source: SME)

Slovakia ranks as the 15th most complex country in the Economic Complexity Index (ECI) ranking based on 2017 data. Compared to a decade prior, its economy has become more complex, improving by one position in the ECI ranking, based on the ranking of the Growth Lab of Harvard university.

“Slovakia’s largest exports are in moderate and high complexity products, vehicles and electronics, respectively,” reads the ranking.

The economic complexity of a country is calculated based on the diversity of exports a country produces and their ubiquity.

The more complex the economy is, the more it is able to face trade wars and crises affecting individual sectors, points out the Denník N.

Research from the Growth Lab finds that countries, whose exports are more complex than expected for their income level, grow faster. Growth can therefore be driven by a process of diversifying knowhow to produce a broader, and increasingly more complex, set of goods and services.

The ranking is traditionally topped by Japan while the Czech Republic placed sixth and Hungary 10th. Denník N ascribes the high rankings of the Czech Republic, Hungary and Slovakia to their dependence on exports to Germany (fourth in the ranking), while a large portion of these exports are secured by the local plants of sophisticated German companies. The manufacturing of cars, car components and electronics, while a large number of different industrial sectors participate in their production, account for a large portion of exports for these countries.

Slovakia is more complex than expected for its income level. As a result, its economy is projected to grow moderately. The Growth Lab’s 2027 Growth Projections foresee growth in Slovakia at 3.3 percent annually over the coming decade, ranking in the top half of countries globally.

The ranking places Slovakia as a high-income country, ranking as the 34th richest economy per capita out of the 133 studied. Its 5.44 million inhabitants have a GDP per capita of $17,579 ($32,371 PPP; 2017). GDP per capita growth has averaged 2.8 percent over the past five years, above regional averages.

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