Slovenia slipped four places in economic efficiency to rank 33rd, while gaining seven spots in business efficiency (40th), one spot in infrastructure (27th) and three spots in government efficiency (39th).

"Slovenia's overall ranking is solid," said Sanja Uršič of the Institute of Economic Research, which partners with the Swiss-based International Institute for Management Development (IMD) in compiling the index.

But as researcher Peter Stanovnik pointed out, several challenges remain, among them an insufficient scope of investments, tax restructuring and health reform. He also pointed to innovation, staffing and productivity as areas that need to be tackled.

On the other hand, Slovenia performs well in measures such as exports, price competitiveness and education.

Stanovnik said investments had improved, but not enough. "Investments are essential for gains in productivity, which is still 20% behind the European average."

The government efficiency indicator improved due to progress in public finances and legislation governing business, while fiscal policy and the social framework held it back.

The improvement of business efficiency was driven be higher productivity, better management practices and values. The situation on the labour market deteriorated. "This is probably due to changes of the minimum wage act, which employers feel will not achieve their intended purpose," said Mateja Denovšek of the Ljubljana Faculty of Economics.

Gains in infrastructure are the result of higher marks for technological infrastructure and education.

"The overall estimate of Slovenia's attraction is based on a well trained workforce, high education levels and reliable infrastructure," according to Drnovšek.

Singapore tops the IMD rankings, followed by Hong Kong and the US. Statistical indicators account for two-thirds of the grades and survey-based indicators provide one-third of the final estimate; in Slovenia 100 managers responded to the survey.