The Slovenia Times

Slovenia's economic growth expected to slow down in 2016


The rate is to drop from between 2.3% and 2.7% projected for 2015 to between 1.8% and 2.3% forecast for 2016.

The most upbeat economic outlook for next year has been forecast by the Institute of Macroeconomic Analysis and Development (IMAD), the government forecaster, which expects a GDP growth of 2.3%.

A bit less optimistic are the European Bank for Reconstruction and Development with the forecast of a 2% growth and the European Commission, Slovenia's central bank and the OECD, which expect a growth of 1.9%.

The International Monetary Fund and the Chamber of Commerce and Industry of Slovenia are even more cautious, projecting Slovenia's economy will expand by 1.8%.

IMAD expects a further improvement in the labour market, coupled with the continuation of certain imbalances which are reflected in the high surplus in the balance of payments.

As a result, Slovenia's gap to the pre-crisis growth of 2008, which has been among the biggest in the EU, will continue to be reduced at a faster pace, IMAD has told the STA.

Exports will continue to be the main engine of growth, something that all forecasters agree on. They are fuelled by strengthened growth in demand in main trade partners and an improved competitiveness at home.

Following a slump in exports to Russia, these have been rerouted to untraditional markets, the central bank has assessed. It expects exports to rise by 4.7% and imports by 3.9% next year.

An increasingly important factor of growth is private consumption, which is expected to be a vital element of recovery next year considering the latest spike in consumer confidence.

"We expect in particular an increase in consumption of durable goods, which slumped most during the crisis, while there is also a gradual growth consumption of other goods that represent the bulk of consumption," IMAD says.

The positive trends are attributed to better conditions in the labour market, which are expected to improve further.

"The favourable trends begun in 2014 will continue. After a 1.5% increase in employment this year, we expect an additional growth of about 1% annually over the next two years," IMAD says.

The European Commission expects Slovenia's unemployment rate to drop to 9.2% next year, with the OECD forecasting the rate at 9.1%.

Due to falling petroleum prices, Slovenia had deflation this year, but consumer prices are expected to rise over the next two years to 0.8% and 1.4% according to the EU Commission and 0.5% and 1.1% forecast by the OECD.


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