Saturday, August 14, 2010

Lessons from Slovakia: Going Anti-Obamanomics Works

Slovakia has had one of the best rebounds from the worldwide Great Recession. In Q2 of 2010, it registered 4.6% growth.

Stefan Karlsson gives us a clue as to why:

Slovakia has a heavy exposure to cyclical industries (in this case mainly the car industry) and while this is part of the explanation for its current boom, that is not the entire story. In the years preceding the financial crisis, Slovakia was a star performer with annual growth rates at around 10%. Due to its exposure to many cyclical industries, Slovakia then suffered a drop in output similar to the euro area average. But unlike Finland it did not see a deeper slump than the average and it had a much stronger boom preceding the slump.

While there are many more contributing factors to Slovakia's success, perhaps the most important one is its strategy of cutting government spending and marginal tax rates.

2 comments:

  1. Those wacky Slovaks. First they manage to succeed from the Czech Republic without slaughtering hundreds of thousands of people.
    Now they are actually growing their economy by having their government not distort the economy as much as many other nations.
    Can perhaps we send an IMF counseling team in to have a chat with them ?

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  2. Obama now has an additional candidate for the Axis of Evilness

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