The Slovenia Times

Slovenia Sixth-Healthiest Eurozone Economy


While saying that the Slovenian economy is highly resilient and dynamic, the Euro Plus Monitor, an annual survey of the economic state of eurozone, puts Slovenia in 10th place among the 17 eurozone members in terms of measures to deal with the crisis.

Slovenia's grade for fundamental economic health of 6.1 (of 10) is 0.5 points above the eurozone average, while its 4.3 point score for adjustment measures stands 0.3 points above the average.

In its assessment of the economic situation in Slovenia, the report says that the fundamental health of the economy is shored up by its resilience to financial shocks and strong trend growth.

Pointing out that Slovenia still has a relatively low level of public debt, the report warns that the structural debt is of more concern.

Moreover, it warns that the economy is hampered by rising labour costs, below-average level of integration of immigrants and excessive regulation.

In terms of the fundamental health of its economy, the country scores 7.3 points for resilience and only 5.6 for competitiveness and fiscal sustainability, respectively.

The grade for adjustments is dragged down by a lack of index for reforms and labour costs, where the country scores 2.7 on a 10 point scale.

In addition to the need to boost competitiveness, the report calls for political agreement on key measures needed to shore up the economy, establishing that "fiscal and banking problems should be manageable once political consensus is found."

Touching on the troubles of Slovenia's banks, the report says that the country is an example of how "even a relatively small banking sector can get a country into trouble if banking supervision fails".

It also suggests that the possibility of a need for an EU-sponsored bailout has not been eliminated.

The report concludes that despite the ongoing recession, the eurozone "is turning into a much more balanced and potentially more dynamic economy" with the help of rapid changes in the countries with serious economic health problems.

This is the second year that the report has been compiled, with Slovenia scoring slightly less on the fundamental health index (-0.4 points, down one place) and slightly better on the adjustment progress indicator (+0.7, up one place) than last year.

The report finds Estonia (7.4 points) to have the most healthy eurozone economy, followed by Luxembourg (7.2) and Germany (7).

Interestingly, the latter two are at the bottom in terms of the adjustment index, scoring 1.6 and 2 points respectively.

Greece, which has the least healthy economy of the eurozone (3.6), leads in terms of adjustment with a score of 8.2 points. It is followed by Ireland (7.4) and Estonia (6.5).

France is singled out by the report for ranking 14th out of 17 in the economic health ranking and also in the bottom in terms of adjustment due to its failure to undertake reforms to boost competitiveness.

While pointing out that the country has immense potential, the report warns that - much like Slovenia - France's competitiveness is being held back by high labour costs and a rigid labour market.

Indeed, it points to an "extremely restrictive labour code, which makes hiring and firing more difficult in France than in any other eurozone country except Slovenia".


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