Capitalism has led to a dead end

 Sergey Adamov, Pravda, July 15-16, 2025 —

Slovakia’s economic problems are snowballing. The published statistics and forecasts are extremely disappointing. The crisis has both internal and external causes, and one problem stems from the other. The capitalist model of development in conditions of long-term instability has put the country in a very difficult position, and the government of Robert Fico is not to be envied.

Not only did Ukraine, through its fault for stopping the transit of Russian gas, have to find an additional 1 billion euros to pay for alternative supplies, but there is also a threat of a serious shortfall in taxes planned in the budget for this year. Even taking into account the reduction in expenses, the state will not receive about 700 million euros.

The government expected GDP growth in 2025 to be 1.9%, but now, according to the most optimistic forecasts, it will be 1.3%. The overall budget deficit will reach 7.1 billion euros. This means that the cabinet is not coping with the situation and the crisis measures developed at the beginning of the year are not enough. They will have to either cut budget expenditures or raise taxes. The option of attracting large foreign investments is not even being considered: there are no favorable conditions and unoccupied niches of interest to solid players.

In addition to the blow to the gas market, Slovakia may suffer from American customs duties. If they remain in effect for long enough, they will knock out the auto industry, which is the country’s main export industry. As Pravda has already reported, the country is home to almost 5.5 million people, and about 300,000 of them are employed in the auto industry. Slovakia is the world leader in the number of people employed in the auto industry per capita, and the sector’s revenues amount to 10% of GDP.

The next reason for the economic crisis is the annual inflation of 10-15% and the fall in real wages in the private sector. According to economists, inflation is usually provoked by the so-called wage-price spiral, when high wages lead to price increases. But in Slovakia the situation is different, purely capitalistic, because there is a profit-price spiral, when companies use their dominant position in an unstable market and chase superprofits.

For example, in 2022-2023, when inflation was at a record high, the profits of some energy companies providing the population with hot water and heating increased by 1000%. And the income of food producers increased by 60%.

In those years, the government coalition was headed by the liberal and pro-European party “Progressive Slovakia”. Many experts called it libertarian, that is, the state’s interference in the affairs of big business was minimal, as was concern for the well-being of the people. Loans were taken on unfavorable terms, anti-Russian sanctions were unquestioningly approved, and military and financial aid to the Kyiv regime was in full swing.

Returning to the problem of food products, it is impossible not to mention a recently published study devoted to Slovakia’s self-sufficiency in this matter. It turned out that only 40% of goods on supermarket shelves are domestically produced. At the same time, they often cost as much as imported ones, or are more expensive. Experts are sounding the alarm and calling this problem a threat to national security. After all, in the event of a shortage of any product or raw material on the world market, it will have to be purchased at exorbitant prices.

Local producers used the situation in 2022-2023 to their advantage. But now they are being squeezed out by competitors from the EU, who are concluding contracts with Slovak supermarket chains, many of which, in turn, are owned by the French or Germans. And then there is the state putting pressure on them with taxes and sanitary standards.

And a new problem is emerging: an unprecedented crisis in agriculture. The reduction of arable land and the outflow of population to the cities have led to the fact that once self-sufficient Slovakia is forced to import about 55 thousand tons of bakery products annually. At the same time, it has the potential to produce twice as much grain and vegetables as the population needs. But many storage facilities have been eliminated, and the manufacturing industry is in decline.

Another headache is cheap Ukrainian exports, which are displacing Slovak wheat and corn from Western European markets. EU restrictions are of little help in this case, since the volumes of contraband are large and it is difficult to combat it. Robert Fico met with farmers in early July and personally promised them to stop “Ukrainian dumping,” but he did not outline any specific mechanisms.

To all this, we must add the spring epidemic of foot-and-mouth disease in livestock farms. More than 8,000 cows and bulls had to be slaughtered, and now farmers are counting their losses, while the dairy industry is missing 120,000 liters of milk every day. It has to be purchased at inflated prices in Poland and the Czech Republic. The state has promised to pay farmers 50 million euros in compensation this year alone, otherwise Slovakia could say goodbye to the dairy industry.

Against the backdrop of all of the above, the country’s position on anti-Russian sanctions is becoming increasingly understandable. Fico’s government is trying to get compensation from Brussels for gas supplies from alternative sources and immunity from prosecution for the early termination of contracts with Russia. And only after that will the cabinet be ready to vote for another package of sanctions. After all, the economy may not withstand another blow, and Slovakia will repeat the fate of Greece in 2010.