Slovakia's economy hammered by gas cutoff, auto collapse

The country — which made rapid progress in the past several years by joining the euro currency and attracting coveted auto industry investment in new factories — showed growth of 2.5 percent in the last quarter of 2008. But serious trouble set in with a Russian gas cutoff that slashed deliveries to factories.

Then, Slovakia was hit by the collapse of auto production because autos account for fully 15 percent of economic output. Industrial production overall fell 22.9 percent, auto output fell by 40.9 percent. Slovakia’s major trading partner, Germany, slid into a deep recession.
The entire region is suffering and some countries — Hungary, Latvia, Romania, Ukraine and Serbia — had to go to the IMF for help to sustain their state finances and currencies.

Not Slovakia. Sevcovic said his country’s banking sector was “absolutely healthy” and government finances do not need IMF help. “There was not a single reason” it would need help, he said.

Meanwhile, car manufacturers attracted to Slovakia by relatively cheap labor inside the single currency zone appeared to be set to survive hard times without major job cuts.

Los Angeles Times