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Slovenia Economic Snapshot

Economic Forecast Summary (May 2021)

Economic growth is projected to rebound and reach 3.5% in 2021 and 4.6% in 2022. New pandemic-related restrictions in early 2021 have delayed the recovery, but growth will pick up in the second half of 2021 as vaccination progresses. Lower uncertainty and favourable financing conditions will encourage private investment, while EU funds will support public investment. After increasing temporarily in 2020 thanks to crisis-related bonuses, wages and incomes are expected to grow at a slower pace.

Reform Priorities (April 2021)

Going for Growth 2021 - Slovenia

Several long-standing vulnerabilities risk slowing down the recovery. Lowering labour taxes should be a priority. Currently, low-skilled workers have few incentives to enter employment or increase work efforts as high-income taxes erode income gains. Another concern is the relatively high share of state-owned enterprises, present across all sectors, which hinder competition and reallocation of resources to most productive firms during the recovery.

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2021 Structural Reform Priorities

  • Tax system: Adjust the tax-benefit system to strengthen work incentives for low and high income earners
  • Labour market: Reform the wage setting process and improve targeting of employment and training assistance
  • Competition and regulation: Eliminate barriers to entry and competition
  • Education and skills: Improve students' performance and employment prospects
  • Labour market and fiscal sustainability: Reform pension regime in light of rapid ageing

 

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