Washington - The International Monetary Fund (IMF) has downgraded its projections for global economic growth in its latest World Economic Outlook, including Slovenia's. The country's GDP is projected to increase by 3.7% this year and by 3% in 2023, a downgrade of 0.9 and 0.6 percentage points, respectively, from the October forecast.

The main reason for the deterioration in the global and Slovenia's economic outlook is Russia's invasion of Ukraine and the sanctions imposed on Russia, a development that has set back the post-pandemic recovery.

The IMF also substantially raised its projection of Slovenia's inflation, which is now expected to run at 6.7% this year, up from 1.8% in October. It is projected to slow marginally to 5.1% in 2023.

Due to high prices of imported goods, in particular energy and input commodities, Slovenia's foreign trade balance has deteriorated. Having recorded a surplus for years, equal to 3.3% of GDP last year, Slovenia is projected to post a gap of 0.5% of GDP, which is to increase to 1.4% of GDP in 2023.

The outlook for the labour market remains positive with the labour survey unemployment rate to drop to 4.5% this year and the next, from 4.7% in 2021.

While Slovenia's growth forecast is still significantly above those for the eurozone, which have been downgraded by 1.1 points to 2.8% for 2022 and by 0.2 points to 2.3% in 2023, it suggests an even more significant slow-down than initially forecast from the country's 8.1% growth last year.

The IMF's is only the first of updated projections for Slovenia to be released by international and domestic forecasters since the start of the war in Ukraine.

The government has not yet taken note of the spring forecast of its economic think-tank, which unofficial reports say downgraded its forecast for the country by half a point to 4.2% for this year and by 0.2 point to 3% for 2023.

Meanwhile, the Chamber of Commerce and Industry has released projections similar to the IMF's, forecasting for Slovenia's GDP to grow by 3.7% this year and by 3.2% the next.