Economic outlook, analysis and forecasts

Slovenia - Economic forecast summary (June 2015)


Economic growth is projected to continue in 2015 due to strong exports and public investment in infrastructure, partly financed by EU funds. Fiscal consolidation, still high unemployment and corporate deleveraging will weigh on domestic demand. A decline in public investment will be a drag on growth in 2016, although private investment and consumption will gain some momentum. Inflation will remain low due to the large degree of slack.

A key priority is smooth and swift corporate restructuring and reducing non-performing loans. Fiscal slippage in structural terms should be avoided but automatic stabilisers should be allowed to operate fully. Continued structural reforms are needed, in particular to lower regulatory burdens and improve efficiency in public services. Strengthening active labour market policies would enhance growth and its inclusiveness. Privatisation and greater openness to FDI would bring new capital and improve corporate governance.

Investment dropped substantially following the 2009 crisis, dragged down by deleveraging in the corporate sector and restructuring of bank balance sheets. As the EU Multiannual Financial Framework comes to an end in 2015, reducing inefficient public spending will be needed to sustain public investment. While residential investment is expected to recover gradually as the economy improves, stronger business investment would require faster progress with corporate restructuring and, to ease credit conditions, reducing non-performing loans in banks.

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