Next year, the economy is expected to expand at a 2.9% rate, which is 0.5 percentage points more than initially forecast.

The forecast for 2018 has been upgraded to 2.6% from 2.3%.

The upgrade of the spring forecast was fuelled by more upbeat expectations for exports and domestic spending, IMAD head Boštjan Vasle said at today's press conference.

Exports are to increase by 5.7% this year, up from 3.7% in the spring forecast. Imports are meanwhile to rise by 5.3%.

Exports growth is to slow down somewhat in the next two years, reaching 5.5% next year and 5% in 2018. Imports however are expected to grow by 5.9% in 2017 and by 5.1% in 2018.

The forecast for domestic spending growth for this year has been upgraded to 2.3% from 1%, but downgraded for the next two years, to 2% from 2.3% for 2017 and to 1.7% to 2.1% for 2018.

IMAD expects investments to recover in the next two years, after suffering a setback this year due to the transition to the new EU financial perspective. Investments are to drop by 5% this year, while a 4% drop was expected in the spring.

In 2017 and 2018, investments are to go up by 6% and 5%, respectively.

Vasle explained that due to the transition to the new financial perspective, public investment will drop significantly this year, while in 2017 and 2018 IMAD expects the drawing of EU funds to pick up again and public investments rise by EUR 350-400m.

Private investments have been going up due to good business results, high imports, the need for technological restructuring, and better conditions for financing of investments.

Loan activities of banks are improving and due to deleveraging companies have more own funds for investment, Vasle said.

Government spending is also to rise this year, mainly due to the public sector pay rise. But Vasle added that the latter contributed to the growth in private spending.

Favourable trends in the labour market are also expected to continue, with this year's employment rate growth expected to reach 1.9%. Next year, it is to drop to 1.4% and the year after to 1.1%.

The registered unemployment rate, which stood at 12.3% last year, is expected to drop to 11.2% this year, 10.1% next year and to 9.5% in 2018.

But Vasle also pointed to the shrinking of the active population. "By 2020, we can expect the number of working age population to decrease by some 90,000 and by another 50,000 until 2030.

"In the future we might lack the appropriate work force for the economic growth we want," he warned.

The monthly gross wages in the private sector are expected to grow by 1.4% this year, and then by 0.6% and 0.9 in 2017 and 2018, respectively.

In the public sector, where they will be 2.6% higher this year, and rise by another 1.1% next year and by 0.4% in 2018, the wage growth will depend on the lifting of austerity measures.

While in the past, the prices were mainly affected by a drop in the prices of energy and raw materials, the future will be marked by inflation due to a gradual increase in these prices.

This year, inflation is expected to be 1.1%, while in 2017 and 2018, it should rise to 1.4% and 1.5%, respectively.