More Slovaks spending abroad after adopting euros

17th April 2009, Comments 0 comments

Weakening currencies in Czech Republic, Hungary and Poland make it cheaper for Slovaks to do their shopping in these neighbouring countries.

BRATISLAVA – Five years ago, Peter Michalka, a copywriter in Bratislava, would never dream of spending his weekends in art galleries in Vienna, only a 60-minute-drive away from the Slovak capital.

But life has changed for the 25-year-old since Slovakia entered the Schengen zone in December 2007 and joined the eurozone in January 2009.

"When I travelled to Vienna last year, I had to keep two budgets – one in Slovak korunas, one in euros. Now I can pay with euros in both countries," he said, adding that he travels to Vienna once in two months, usually spending about EUR 200 on clothes and books.

While Vienna represents a traditional shopping destination for residents of Bratislava, people from all Slovak regions have discovered bargain-shopping in other neighbouring countries – the Czech Republic, Hungary and Poland.

Slovakia was the first among former Soviet bloc countries to adopt the euro on 1 January 2009, a move that put its consumers in a favourable position against Slovakia's neighbours, whose currencies have weakened in the global financial crisis.

"Growing interest in shopping abroad became obvious between January and February as a result of rapid easing of neighbouring currencies," Juraj Valachy, an analyst with Tatra Banka, told AFP.

"Since July 2008, when the Slovak koruna's rate was fixed against the euro, the Czech koruna has eased by 11 percent, the Hungarian forint by 23 percent and the Polish zloty by 32 percent," he added.

Among neighbouring countries it was Hungary that benefited most from the Slovak customer-drain, the GfK market research agency wrote in its latest report.

"Since the beginning of 2009 the number and volume of financial transactions made by the Slovaks in neighbouring countries have risen considerably," spokesman for Slovenska Sporitelna, Stefan Frimmer, told AFP.

"In Hungary, the number of transactions has risen more than five times while the amount of money has risen seven times against the same period last year," he added.

One a recent day half the cars parked outside the supermarket in the Hungarian town of Mosonmagyarovar, about 20 kilometres (12 miles) from Bratislava, had Slovak plates.

"Everybody speaks about how cheap it is to shop here," said Miroslav Pekar, a 28-year-old bricklayer from Bratislava.

"It's true that some goods are 30 percent cheaper but I'm looking for a better quality," he added, sipping on his cider, the only thing he bought in Mosonmagyarovar.

"Petrol and oil are cheaper in Hungary as well," said Jozef Kazar, a 28-year-old manager in Bratislava.

"With every fully-filled tank, I can save about EUR 5 although I spend half of that to get there and back," he added.

Slovakia's southern neighbour borders on Bratislava, a wealthy region that has yet to be hit by the salary freezes and lay-offs that have affected other parts of the country.

Yet, thrifty Slovaks prefer to spend their money in Hungary, which harms national retailers.

According to official data, annual retail sales in Slovakia slumped by 10.3 percent in February at constant prices, the biggest fall in nearly six years, against January's drop of 3.3 percent.

"If we consider the strong rate of the euro against neighbouring currencies and their lower value-added tax, the difference in prices can reach up to 40 or more percent," Pavol Konstiak from the Trade and Tourism Association told AFP.

"By shopping abroad people support economies of neighbouring countries," he said, adding that Slovak retailers "can't cut their prices low enough to compete with retailers abroad".

"If this trend persists until the end of the year, big retail chains will survive but small ones will suffer hard," Konstiak said.

Slovak customers shopping abroad "could have a negative impact on the Slovak economy, as household consumption is currently the most important component of GDP, fuelling growth in Slovakia," according to the GfK market report.

"I know that this doesn't help our economy but we have to care about our family in the first place," said a father of a four-member family from Bratislava, while pushing a trolley full of yoghurts, sweets, soda and washing powder towards his car in Mosonmagyarovar.

Jozef Kazar puts national pride in the first place instead of saving money. "Finally, we can afford to shop in Austria. We used to shop in Hungary before but Vienna, that's a whole new feeling," he said, showing designer shoes he would have never bought on the eastern side of the Iron Curtain.

AFP / Expatica

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