The Slovenia Times

IMF Upgrades 2014 GDP Forecast for Slovenia


The October forecasts by the IMF were among the most pessimistic when it comes to international financial institutions, but the head of the IMF mission to Slovenia Antonio Spilimbergo assessed on Friday that signs of stabilisation were noticeable which coincide with a gradual improvement in the eurozone.

He believes that the December measures meant to fix banks reduced uncertainty, although weak domestic demand continues to hamper economic activity, companies still have too much debt and consumers are cautious. Spilimbergo expects signs of recovery could appear in the second half of 2014.

According to the IMF, last year's 4.8% drop in domestic demand will be followed by another 3% decline this year. Private consumption was down 3.4% last year and is to decrease by another 2.8%, while the estimated figures for public spending are -3% in 2013 and -2.5% this year.

The decline in investments is expected to slow down substantially to 4.2% following a 16.5% slide in 2012 and a 9% drop last year.

The trend for exports remains positive, with last year's 4.1% growth expected to be followed by another 3.7% this year.

The IMF meanwhile downgraded its inflation estimate, from 2.3% and 1.8% last year and this year respectively to 1.8% and 1.4%.

The unemployment rate is expected to remain below the eurozone average, although it is to rise from this year's 10.5% (0.2 percentage points more than in the October forecast) to 10.8% next year (0.1 points less than in October).

As regard public finances, the IMF factored the costs of the bank recapitalisation into the government budget for this year, putting the deficit at 15.3% of GDP.

The structural deficit, which excludes the bank costs and the effects of the business cycle, is meanwhile put at 2.3% of GDP, while a 1.2% GDP surplus is arrived at if one disregards the costs of interest payments.


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