"Some of the downside risks are being realised and we can expect that in the coming quarters economic growth will be lower than forecast," IMAD director Bostjan Vasle told the press.

In its autumn forecast IMAD put GDP growth at 1.5% this year and 2% in 2012, but Vasle said the figures were based on assumptions of international economic conditions, which have deteriorated sharply.

Whereas forecasts for euro area growth had hovered around 1.6% in July, they do not exceed 0.6% now, according to Vasle.

As for current domestic trends, Vasle said exports continue to pick up but construction is still contracting, having already shrunk to 40% of its level in 2008. Manufacturing has also suffered.

As a result, Slovenia's competitiveness has been eroded.

"Market shares in our key trading partners are significantly lower than before the crisis, which highlights the structural weaknesses of the Slovenian economy," Vasle said.

Indeed, competitiveness is becoming a key factor holding back the recovery, along with the ongoing credit crunch and insufficient consolidation of public finances.

The labour market also shows signs of continued weakness, as the labour force contracted for the third month in a row in August and the ranks of the unemployed swelled.