The Slovenia Times

European Commission announces Slovenia fixed its economic imbalances


Addressing the press after the release of the European Semester Winter Package review, European Commission vice-president Valdis Dombrovskis congratulated Slovenia on having strengthened the foundations of its economy and called for also tackling the remaining shortcomings.

Slovenia's EU Commissioner Violeta Bulc added the news meant "a strong message to the market, to domestic and foreign investors, that Slovenia is a stable country and a good partner for future investment".

The Commission, which highlights the strong GDP and export growth, wrote for Slovenia that "the sources of imbalances that led to the deep crisis of 2012-2013 have rapidly receded ... the economy is now growing robustly".

The report says the banking sector has been strengthened, while noting as remaining challenges the continued monitoring of the restructured loans and long-term profitability given the current low interest environment. Also, "privatising NLB [bank] remains essential".

Moreover, "deleveraging in the corporate sector appears to have been completed and investment is growing". On the other hand "the level of private investment, including FDI, remains relatively low compared to peer countries".

The Commission notes a decrease in public debt to 78.5% of GDP in 2016 on the back of strong nominal GDP growth and a reduction in the general government deficit. Public debt continues to decline and is expected to reach 72% of GDP in 2019, 10 percentage points below its peak in 2015.

However, an ageing population poses a major challenge to long-term sustainability, which is why the report urges measure to secure stable financing of healthcare and pensions.

The report moreover points to the continuing strengthening of the labour market, while warning that the activity and employment rates of older workers remain among the lowest in the EU.

Finally, the business environment and access to finance have improved but challenges remain, including securing less "restrictive product and service market regulation" and further enhancing independent oversight in public procurement.

The Finance Ministry described the report as "encouraging news ... an acknowledgement of the work done and an opportunity for a warning that we are not yet at the end of the path".

It said that the medium-term fiscal position has not yet been reached or the required fiscal wiggle room secured for the county to effectively tackle the expected negative consequences of the next turn in the boom and bust cycle.

The ministry agrees with the need for structural reforms related to the demographic trends and for measures in the field of productivity and competitiveness.

It said social partners had already agreed that the retirement age needed to be raised, "however at the same time labour market measures will be needed that will further early employment of the young and extended activity of older people".


More from Nekategorizirano