The Institute of Macroeconomic Analysis and Development (IMAD), which acts as the government's economic forecaster, has sharply downgraded the GDP growth forecast for Slovenia for this year. It expects the economy to grow at a pace of only 1.5%, down from its spring forecast of 2.4%. For next year it reduced the forecast by just 0.1 points, to 2.4%.

The downgrade is based on expectations that export growth will be lower than forecast in spring, due to weaker foreign demand and higher unit labour costs.

Exports are projected to grow by 0.9% instead of the originally forecast 1.5%, while import growth is expected to be only slightly lower than initially forecast, at 3.5%.

"Foreign demand is growing more slowly than we expected in spring. The outlook for Germany in particular is worse and services exports are declining," IMAD director Maja Bednaš told the press on Thursday.

Government investment, among the highest in the EU as a share of GDP, is projected to outpace last year's, with private investment spending expected to stagnate.

On the other hand, both private and government consumption remain robust, growing at 1.6% and 8.5%, respectively.

For 2026 IMAD expects the economy to expand at a rate of 2.5% as foreign demand picks up again and investments in manufacturing and construction grow, buoyed by post-flood reconstruction.

Private spending is also expected to pick up given that real incomes are growing, in particular due to pay increase in the public sector.

IMAD however notes that employment is at a record high and unemployment the lowest it has ever been, which is why there is little chance that employment will grow further in the next two years.

Average annual inflation is projected to stand at 2.1% this year, down by 0.6 percentage points compared to the spring forecast, but tick up again, to 3.3%, next year.

Prime Minister Robert Golob commented on the downgrade saying 1.5% is still significantly higher than the forecast for the eurozone.

Even more importantly, IMAD did not change its forecast regarding wage growth: it remains significantly higher than inflation, which has been kept "deep below the EU average."