In its 12 March forecast the Institute of Macroeconomic Development and Analysis (IMAD) noted the likelihood of a further downgrade in the outlook in case of an aggravated turmoil provoked by the coronavirus pandemic.

"The situation has changed considerably since the release of the forecast less than two weeks ago," the forecaster said, pointing to the impact due to the growing outbreak in Italy and the virus's spread to other European countries and the measures taken in Slovenia and elsewhere to contain it.

"Even under the assumption that the current strained situation and disruption in the manufacturing and services sectors lasted for two months, we can expect a more than five percent fall in GDP. Our projections based on that assumption currently run at between six and eight percent."

The extent of the contraction will depend on the further progress and length of the pandemic, IMAD says, adding that a lasting stabilisation in the economic situation was not to be expected before a vaccine is available for mass inoculation.

The hardest-hit industries such as the hotel and hospitality sectors, personal services and trade in non-food items are expected so see value added slashed by up to 70% or more, while the manufacturing sector, retail, transport and some business services can expect a halving of value added while lockdown measures are in force.

By contrast, agriculture, energy and sectors such as telecommunication services may even expect growth.

In case of a likelier scenario of a prolonged disruption to business, the impact on the economy will be even longer and more far-reaching, said IMAD, projecting more bankruptcies and a heavier impact on the labour market.

The key in the developments will be the measures taken.

"An absolute priority is measures to support the health system and supplying all needed protective and other equipment, while in the economic field the most urgent is immediate action to mitigate the consequences of the spread in the epidemic to support businesses and the population in overcoming liquidity problems due to a loss of income and to preserve as many jobs as possible, followed by measures to kick-start the economy."

The think-tank will draw up a detailed outlook after measures to contain the epidemic are lifted.