According to a report from Business Monitor International (BMI), Central and Eastern Europe (CEE) still holds risks for investors as a result of the build up of the years of heavy foreign lending into the region.

BMI say that Slovakia is a likely future out-performer and should be in a position to benefit from the tentative macroeconomic recovery which is expected from 2010 onwards. The country is an attractive market for FDI and its good geographical access to both the major developed and developing economies of the EU, as well as euro adoption in 2009, makes it attractive as a base for export-oriented manufacturing.

While Slovakia has been recently affected by the global financial crisis, the economy has held up relatively well and there is an increasingly optimistic outlook for 2010. In May, the credit ratings agency Fitch Ratings gave Slovakia an "A+" rating with a ‘stable’ outlook. Fitch noted Slovakias institutional strengths, its political stability - including its membership of the European Union (EU) - and the generally attractive business environment.

Slovakias real GDP growth is expected to outpace the euro zone average through to the end of our five-year forecast period, with the economy projected to expand by an average of 3.3% between 2011 and 2014.

Commenting on the property market in Slovakia, the BMI report says that the boom period, like that of many other countries, ended in 2008. During the boom years, the economy there performed well, credit was freely available, consumer confidence and demand were high, and there was no oversupply of properties. However the real estate market contracted in 2009, in Q209, house prices fell by an average of 15.3% year-on-year (y-o-y) in real terms. The Slovakian market is expected to be fairly flat in 2010 and house prices are not expected to fall much further, except in highly overvalued areas.

The supply of residential property is currently outstripping demand and the steepest price falls have been for apartments, especially small apartments. The oversupply of residential property is affecting vacancy rates. The vacancy rate for Bratislava in Q2009 increased by 2.8 percentage points from 8.7% to 11.5%, according to CBRE.

The BMI report concludes that the outlook for the construction industry is quite favourable and that the robust long-term picture partly reflects the ongoing upgrade of transport infrastructure - demonstrative of the governments capital spending plans. This spending should partly offset a slowdown in construction activity by the private sector.

The report also highlights that the reduction in corruption, the implementation of a highly attractive foreign investment policy in Central Europe, joining the EU in 2004 and the adoption of the euro in 2009 have all demonstrated Slovakias commitment to economic reform.