Slovenia

Slovenia - Economic forecast summary (November 2017)

 

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The strong and broad-based economic expansion is projected to moderate in 2018 and 2019, though with growth remaining above potential. Private consumption and housing investment will be supported by continued employment gains and faster real wage growth. Robust investment growth will decelerate as a new cycle of EU structural funds matures. Growth of exports, and imports of intermediary inputs, should ease as external competitiveness deteriorates due to the intensification of labour market tensions.

The fiscal stance is broadly neutral, with the budget deficit narrowing for cyclical reasons. Fiscal policy may have to be tightened to contain inflationary pressures. Greater privatisation efforts would reduce the debt-to-GDP ratio in anticipation of future ageing-related spending, while also helping to fund measures to boost inclusiveness, productivity and competitiveness.

Financial vulnerabilities have diminished considerably since the 2013 domestic banking crisis. However, the low interest-rate environment poses risks to banks’ future stability by reducing their scope to boost interest margins. In addition, banks’ greater reliance on short-term funding to finance long-term fixed-rate loans poses a risk to profitability if interest rates should rise.


 

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Other information

Economic Survey of Slovenia (survey page)

 

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