Slovenia's economic freedom score is 62.9 points out of 100, down 1.7 points from last year. The country placed behind Portugal and ahead of South Africa on the lower end of the list of "moderately free" countries.

The list is topped by Hong Kong with 89.9 points, which is followed by Singapore (87.5 points) and Australia (83.1 points).

Slovenia ranked 32nd among 43 European countries. Its overall score is above the world average of 59.5 points but bellow the regional average of 66.1 points.

According to Heritage Foundation, a decline was recorded in half of the 10 economic freedoms in Slovenia, while the most substantial drop was recorded in government spending.

The index evaluates countries based on the rule of law, regulatory efficiency, limited government, and open markets.

"The Slovenian government's record on structural reform has been uneven, and economic dynamism remains constrained by institutional weaknesses that undermine prospects for long-term economic development.

"In particular, the judicial system remains inefficient and vulnerable to political interference. Corruption, perceived as widespread, continues to be a problem."

Nevertheless, the think-tank says the overall regulatory framework has been gradually evolving to promote the emergence of a more vibrant private sector and encourage broad-based employment growth.

Launching a business in Slovenia takes only six days, but it takes almost 200 days to complete all of the necessary licensing requirements, the reports says, adding that the labour market remains saddled with rigid labour regulations that hamper dynamic employment growth.

"Slovenia enjoys a comparatively high degree of trade freedom, as tariff rates are quite low, but dynamic economic gains from trade are undercut by the lack of reform progress in other areas that are critical to sustaining open markets in the financial and investment areas."