The Slovenia Times

Forecasts indicate Slovenia entering boom phase


The Organisation for Economic Cooperation and Development (OECD) expects Slovenia's GDP to increase by 2.4%, the European Commission forecast 2.6% growth, the government think tank IMAD 2.9% and the Chamber of Commerce and Industry (GZS) 2.3%.

All four also expect further improvements on the job market, with the OECD for instance projecting survey unemployment will fall to 7.1% from what was 7.3% after the first nine months on 2016.

This in turn should fuel domestic spending, with IMAD for instance expecting a 2% increase that it said will offset an expected 5.9% rise in imports that will not be matched by a projected 5.5% increase in exports, the main driving force of the country's economy.

The trend of slowly rising wages in the private sector is expected to persist. IMAD forecast a 0.6% rise in gross wages, arguing the increase will remain moderate as companies will want to stay competitive.

Another element expected to fuel the positive cycle is a 4% increase in public investment, a rise that the GZS noted was also a result of a record low level of government investment in 2016.

The chamber expects that investment will also increase substantially in the private sector, especially in equipment and machinery.

The analysts agree that all this will positively affect public finances, with the government already persistently reducing the budget deficit, which is estimated to reach 2.2% of GDP in 2016.

The OECD expects to the government deficit to fall to 1.6% of GDP in 2017, while the European Commission is more reserved, forecasting 2% and urging additional fiscal efforts.

The GZS meanwhile argues that many challenges remain despite the improved competitiveness of Slovenia's economy in recent years.

It for instance pointed to the problems companies with high added value and wages have in attracting foreign and motivating domestic talent due to high labour costs.

The Chamber of Trade Crafts and Small Business (OZS) added to this unstable conditions related to haphazard legislative changes and administrative obstacles.


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