The Slovenia Times

Fitch affirms Slovenia rating, outlook stable


Frankfurt - Rating agency Fitch has affirmed Slovenia's credit rating at A with a stable outlook, Fitch said on its website on Friday, adding that this reflected the agency's expectations of a permanent recovery of the Slovenian economy thanks to the expected increase in investment and continued exports.

Fitch also said it expected the policy for the mid-term stability of public finance to continue, noting that this expectation was based on the "fiscal sensibility and credibility of institutions" before the pandemic.

Fitch expects the Slovenian economy to record a 6.4% expansion this year. With strong growth in domestic demand, the economic growth should return to pre-pandemic levels by the end of the year, it said.

Among short-term risks, it mentioned new problems associated with the pandemic and the vaccination rate in Slovenia that is below the EU average. This could have a negative effect on business sentiment, the agency warns.

However, most activities have proven to be resilient in the last 18 months, which significantly reduced the risk of long-term economic consequences.

The agency expects Slovenia's GDP to grow by 3.8% on average in the 2022-2023 period, powered by increased demand and a rise in investment associated with the EU recovery and resilience funding and the 2014-2020 financial framework.

The agency expects Slovenia's budget deficit to stand at 7.4% this year, and at 5.6% and 3.7% of GDP in 2022 and 2023, respectively.

Public debt is to gradually drop from 79.8% of GDP in 2020 to 73.4% in 2025.

Trends regarding inflation are expected to be similar as in other eurozone countries, with inflation being powered by higher energy prices.

The agency also noted Slovenia's high level of employment and almost record low unemployment rate, and banks' high liquidity and healthy capital ratios.


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