The Finance Ministry of Slovakia reported this week that the nation’s economic growth will swell to nearly five percent next year as a result of increased automotive output, in one of Europe’s greatest economic success stories.
A maximum personal income tax rate of just 25 percent has stimulated high domestic demand in the midst of which the Slovak auto industry has boomed. The Finance Ministry attributes next year’s projected GDP boost to this high internal demand.
Home to some 5.4 million people, Slovak factories churn out an average of over one million cars annually. Slovakia’s successful auto industry already manufactures more cars per capita than any other nation on the planet, producing 105 cars per 1,000 people.
Slovakia’s unemployment rate has dropped steadily this past year, from 6.9 percent in July 2017 to just 5.4 percent in June 2018, well below the average EU unemployment rate of 7.4 percent. So abundant are the automotive jobs in Slovakia that the main inhibitor to growth in that sector is a lack of people to man the factories.
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Jaguar Land Rover recently announced that they will relocate all of their Discovery model production to Slovakia. Volkswagen is also slated to begin new SUV production at their existing Volkswagen plant.
Slovakia is also home to massive Kia and Peugeot plants. Once Jaguar Land Rover’s first phase of production is complete, they will produce 150,000 cars per year while employing 2,800 people.
To meet demand, Volkswagen will add 1,500 jobs while other manufacturers will tack on an additional 1,200. Within a month of announcing their plans to increase production, Jaguar received 40,000 expressions of interest.
Manufacturers in Slovakia are also investing in local talent development programs, such as Jaguar’s student apprenticeship program.
Slovakia, currently the sixth largest car-producing country in the EU, is projected to boost their economic growth by up to 4.8 percent in 2019.
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