BRATISLAVA (Reuters) - Slovakia joined the euro on Thursday, hoping that membership of the single currency will soften the blow of the global financial crisis and bring about greater economic convergence with richer European Union states.
Slovakia left behind other, bigger east European nations — Poland, Hungary and the Czech Republic — and will likely be the region’s last euro entrant for some time given the present financial turmoil.
Like the EU’s other eastern capitals, Bratislava has traded drab communist-era facades for flashy restaurants and high-end boutiques since joining the bloc in 2004. But Slovakia’s 5.4 million people will be the poorest in the euro club, with gross domestic product per capita of 71 percent of the EU’s average.
However, many Slovaks hope the single currency will bring economic growth by attracting new foreign businesses and help the country catch up with the older EU states.
“The euro is pushing us into the position of full-fledged Europeans, even though we will be worse off than those from the West for a few more years,” Peter Turcik, a columnist at economic daily Hospodarske Noviny, wrote Wednesday.
“But it is worth it, because the bridges pictured on the euro notes are more than just symbolic bridges to a better future,” Turcik said in a farewell note for the crown.
Joining the euro has capped a decade of transformation for Slovakia from central European laggard to an EU growth leader.
Its economy expanded 10.4 percent last year. Next year, the government sees growth exceeding 4 percent despite recession in big euro zone states such as Germany and Britain.
The fast economic growth, stimulated by the reforms of the previous centre-right government, has helped leftist Prime Minister Robert Fico cut budget deficits while boosting welfare spending.
Slovakia has avoided major damage from the financial crisis, although its $100 billion (68 billion pound) economy will be hit by weaker demand for the cars and TV sets produced at the scores of new factories set up by foreign firms in a decade of booming investment.
Slovaks had for long feared that the euro would mean higher prices for goods and services, as seen in previous newcomers, such as Slovenia in 2007.
Opinion polls show Slovaks still worry about a spike in prices, but they have become more enthusiastic about the single currency since the financial crisis rocked their emerging market neighbours.
The crown is the only unit in the region that has not weakened against the euro since its exchange rate was locked in at 30.126 against the single currency in July.
In comparison, Poland’s zloty lost 30 percent per euro and Hungary’s forint 15 percent. The Czech crown is down 12 percent.
Reporting by Peter Laca; Editing by Giles Elgood