The accelerated export growth is driven by stronger growth in foreign demand in most of Slovenia's main trading partners, supported by export performance which has been rising since 2011 and has thus improved significantly this year. Export growth will also remain high over the next two years, when similar growth in foreign demand is expected alongside further improvements in export performance. 

Domestic demand will also remain a significant factor of growth in 2017-2019. Household consumption will continue to be boosted by growth in disposable income amid favourable conditions in the labour market, which has a favourable impact on consumer confidence. Over the next two years, growth in private consumption will otherwise gradually slow, primarily due to anticipated lower employment growth. Investment is expected to increase further. The rising demand and favourable conditions for investment (high profits and low interest rates) will support growth in investment in machinery and equipment; amid the rebound in the property market, we also expect growth in housing investment. After 2016's significant decline due to the transition to the new EU financial perspective, general government investment will accelerate as a proportion of total investment growth in 2017. Otherwise, modest growth in government consumption will continue in all three years.

The level of employment will be high, rising in most sectors with unemployment consequently reducing further to below 90,000 persons for the year. Over the coming years, employment growth will be increasingly affected by demographic factors, i.e. the expected contraction of the working-age population. In 2017-2019, wage growth will remain moderate and will not exceed productivity growth.

Inflation will hover around 2% in the next few years. After a period of low price growth/deflation, the growth of domestic and foreign demand will boost the growth of service prices in particular, while - in the absence of commodity shocks from abroad - price rises in energy and non-energy goods will remain moderate.

The European Commission in its Autumn Forecast also predicts broad-based economic growth in 2017 and the next two years. The key drivers remain high export growth, investment and household consumption. The European Commission also exposes increasing demographic factors over the next few years.

Institute of Macroeconomic Analyses and Development