Brdo pri Kranju - The OECD recommends to Slovenia in its latest report to focus on high inflation in the short term and then accelerate reforms that would increase productivity, make growth more sustainable and address ageing. Absence of reforms is to put additional pressure on pensions, healthcare and the labour market.

Slovenia has bounced back strongly post-Covid but its economic activity is hindered by high inflation, bottlenecks in supply chains and the war in Ukraine, the Organisation for Economic Cooperation and Development (OECD) says in its 2022 Economic Review for Slovenia.

"The pension system needs to be adapted to longer life expectancy and ensure longer and healthier working activity," Alvaro Santos Pereira said at the presentation of the report, which took place at Brdo pri Kranju, via video link.

Pereira said that targetted measures to help the most vulnerable groups were needed to address the high inflation as the No. 1 problem at the moment.

He urged a medium-term fiscal consolidation plan, but warned that it was important to be cautious about abolishing crisis incentives so as not to affect the recovery.

To ensure robust growth, Slovenia should cut tax wedge, raise taxes on consumption and property, simplify the VAT system by expanding the base rate, and encourage companies to set pay as set down at the level of individual industries.

Pereira identified digitalisation as another challenge, saying that Slovenia should improve connectivity by making broadband connections more accessible.

Companies should use ICT tools to a greater degree, including big data analysis, while a shortage of ICT experts could be addressed through encouraging ICT studies.

Digitalisation could also be enhanced by shifting from voluntary to compulsory use of e-public administration services.

The OECD considers the share of Slovenian state-owned companies, especially in tourism, still too large, and advises starting privatising once the current crisis is over.

"Slovenia is well on its way to convergence with the richer OECD countries, but challenges remain and overcoming them requires structural reforms to make Slovenia a more digital, sustainable and efficient economy... Slovenia needs to continue on the reform path it is on and think longer term," Pereira summarised the report.

The report was to be presented by OECD chief economist Laurence Boone, but she cancelled the visit at the last minute.