By Peter Laca
BRATISLAVA, Dec 31 (Reuters) - Slovakia adopts the euro at
midnight on Wednesday and its people are hopeful that membership
will insulate them from the worst of the storms battering
Europe's emerging economies.
While governments across the region cut growth forecasts and
investors dump assets -- wiping out years of gains in other
eastern European Union currencies like Poland's zloty and
Hungary's forint -- Slovakia is surviving relatively unscathed.
"It's excellent," said Matej Sobol, a 27-year-old sports
instructor from the northern ski resort town Liptovsky Mikulas.
"Seeing what is happening to the zloty or forint and then having
the crown fixed to the euro has really been a sort of a shield."
The neighbouring Czechs once sneered at Slovakia's push to
join the euro quickly. The Alpine country of 5.4 million will be
the poorest euro member, behind Portugal with 71 percent of the
EU's average gross domestic product per capita.
But it is already seeing benefits. Its crown is the only
currency in the region that has not weakened since its exchange
rate was locked at 30.126 per euro in July, a boon for Slovaks
who can travel abroad or buy imported goods at stable prices.
In comparison, Poland's zloty lost 30 percent per euro and
Hungary's forint 15 percent. The Czech crown is down 12 percent.
Euro adoption had for months fuelled fear among Slovaks that
the switch will bring higher prices, as seen in other newcomers
to a club that will now have 16 members.
But months of financial turmoil across the globe and
international rescue packages for countries such as fellow EU
members Latvia and Hungary have changed many people's minds.
A poll for daily Hospodarske Noviny in November showed 58
percent of Slovaks viewed the euro positively, versus 43 percent
a year earlier. Only 35 percent saw it as negative, from 52
percent.
ANCHOR IN TROUBLED WATERS
On Wednesday, the final day for the crown, main broadsheet
Sme splashed a cartoon on its front page picturing the euro as a
sturdy anchor for a small boat rocked by turbulent waters.
Slovakia will be the first among the larger ex-communist EU
states to adopt the euro. Smaller Slovenia, a wealthy nation
which was part of the former Yugoslavia, joined in 2007.
It will also likely be the region's last entrant for years
as the crisis makes it more difficult to qualify.
Hardship in the euro zone, Slovakia's main export market,
means the $100 billion economy will suffer. A 25 percent fall in
new auto sales in Western Europe is a dire signal for the
country that leads the world in cars produced per capita.
The euro will also rob it of a flexible exchange rate that
could make its exports cheaper for Western consumers. On the
other hand, the weakness of the zloty or forint could eventually
help Poland and Hungary recover.
Although growth is expected to plummet from a peak of 10.4
percent in 2007, the Slovaks are still reaping benefits of
structural reforms made by its previous government, and its
cheap skilled workers. It could still lead the EU in growth, and
the cabinet forecasts a 4.6 percent expansion.
The switchover will kill off the short-lived Slovak crown,
which appeared after Slovakia split from former Federation
partners the Czechs in 1993. It adds to a series of changes
since Slovakia first emerged as part of Czechoslovakia in 1918.
"This is already my fifth currency," said Michal Burcin, a
78-year-old pensioner. "I will just get used to it."
(Editing by Michael Winfrey/Keith Weir)
