Slovenia - Economic forecast summary (November 2015)


Economic growth will be supported by strong exports and gradually recovering private consumption and investment. The improving labour market will raise incomes and the healthier corporate sector will boost investment and improve competitiveness. Growth will slow temporarily in 2016 as investment is expected to decelerate, due to the lower inflow of EU funds. Unemployment will decline gradually, but remaining slack will contain inflation.

Continued corporate restructuring and dealing with remaining non-performing loans in order to revive credit activity remain priorities. Further fiscal consolidation is needed given the high and rising public debt. Permanent measures are key to arrest growing public expenditure, but, at the same time, the incomes of the poorest need to be protected. Well-designed structural reforms to education, health care and public administration could bring savings without jeopardising services. Ageing pressures can be mitigated by raising the participation rates of the young and old. Growth could be raised further by lowering regulatory burdens, continuing to pursue the planned privatisation programme and boosting foreign direct investment.

Greenhouse gas emissions per capita are below the OECD average. Rising emissions from transport, due to heavy international transit traffic on roads, have been offset in recent years by falling emissions from energy. Implicit CO2 taxation is high but effective tax rates vary across different forms of energy. Measures favouring emissions, such as low tax rates on some forms of energy, should be phased out. The government has introduced measures to support the installation of low-carbon and efficient energy sources, which could be backed up by encouraging an increase in Slovenia's very low expenditure on energy-related R&D.

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