Slovakia is interested in making the most of its transit capacity and diversifying its sources of revenue from natural gas transportation. To this end, it seeks to increase the degree of integration into regional European gas markets, while investing in the flexibility and reliability of its own GTS. In the medium term, having achieved a high level of interconnection of the national GTS with neighboring countries and natural gas supply lines, Slovakia can offer gas transportation services in all directions (north-southeast-west) through its territory, while diversifying its sources of origin.
Eustream believes that over the next 10 years, natural gas will maintain its important position in the energy balance of the European Union and will support the trend of low-carbon economic development.
The largest decline in industrial production among EU member-states is illustrative of the economic crisis in Slovakia, which is developing against the general background of the recession in the world economy. As of June 2020, Slovak industrial production decreased by 33.5% as compared to the same period of last year. A similar negative trend is observed in other Central and Eastern European countries, in particular in Hungary (-27.6% of industrial production), Romania (-27.4%), and the Czech Republic (-25%), which precede Slovakia in these figures.
The main tool for balancing public finances and stabilization of the situation in the economy of the Slovak Republic is the use of EU aid funds.
The collapse in oil prices and the subsequent decline in oil production within the OPEC++ deal have severely affected the Russian budget revenues. The restrictions introduced in the framework of the fight against coronavirus stopped the service sector and almost all non-food trade. This combination (decrease in revenues and blocking trade) has led to a very unusual nature of current crisis: the simultaneous shock of both supply and demand. This has happened for the first time with no precedents throughout post-Soviet history.
An unusual combination (a fall in both demand and supply), multiplied by insecurity at the beginning of the pandemic, gave rise to a flurry of apocalyptic forecasts.
In 2020, there will be significant changes in the Polish energy sector, which, according to our experts, will have a long-term effect on Poland’s energy policy in the next 5-10 years.
After the formation of the new Polish government of Mateusz Morawiecki, the basics of energy policy as well as plans to reform energy companies and develop new energy sectors were presented. As a part of implementation of the European policy of decarbonization of the economies of EU member states, Poland is trying to make the most of the financial resources of relevant EU funds, as well as to take measures to consolidate energy business under the control of the government.
Our experts analyzed the “Stability Program of the Slovak Republic for 2020 to 2023” (Program stability Slovenskej republiky na roky 2020 až 2023), which is the key medium-term document in the economic sphere of Slovakia. The document was developed by the Ministry of Finance of the Slovak Republic, approved at the meeting of the government of Slovakia on May 18, 2020 and should be supported by the parliament. The program defines the budget, fiscal and monetary policy of the state in the economic crisis, which is developing in the Slovak Republic against the general background of the global economic recession and the pandemic of the COVID-19 virus. The document also takes into account the economic component of the 4-year action program of the government of Prime Minister Igor Matovič, which was published on April 20, 2020.
The new government of Slovakia, headed by Prime Minister Igor Matovič, follows the energy policy of the previous government of Peter Pellegrini, which is aimed at increasing the role of the Slovak Republic as a transit country by increasing the level of interconnection of the Slovak gas transportation system (GTS) with regional gas European markets. Such a policy of Slovakia aims to make the most of its geopolitical position and is characterized by attempts to establish pragmatic relations with all key players at the European gas market, primarily with Russia, which remains the main supplier of natural gas to the countries of Central and Eastern Europe.
The unfavorable global economic situation and the high dependence of the Slovak economy on exports may lead to a deep economic recession in Slovakia, which, according to preliminary estimates of our experts, will last until 2021.
In contrast to the officially published data, our experts estimate that the losses of the Slovak economy in 2020 will amount to 12% of GDP or not less than EUR 11 billion; the unemployment rate may exceed 10% of the working population; the budget deficit will reach 9% of GDP, and external debt will grow by more than 60% of GDP.
According to our experts, the economic component of the 4-year program of government actions put forward by Prime Minister Igor Matovič, which was promulgated on April 20, 2020, is contradictory (in particular, regarding interagency cooperation), does not contain details of measures aimed at implementation of formulated commitments and data regarding the financial support of achieving the declared goals.
At present, the possible deficit of the state budget of the Slovak Republic on the results of 2020 is estimated at 9% of GDP, and the growth of external public debt is possible at the level of up to 60% of GDP. The economic recovery at the level of 2019 is expected in the medium term.
The economic crisis in Slovakia, which is developing against the backdrop of the recession of the world economy, is significantly complicated by restrictive measures on business activity in the country, which the government of Slovakia has been introducing since March 16, 2020 to counter the spread of the COVID-19 virus.
Given that Slovakia was in a crisis period during the regular parliamentary elections held on February 29, 2020, with further formation of the new government on March 18, 2020, implementation of measures to respond to the economic component of the crisis took place only in the second half of April.