The Slovenia Times

OECD Strongly Upgrades Slovenia's Growth Projection

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By upgrading the projection for Slovenia's GDP growth, the OECD joined other international institutions that recently adjusted their forecasts to express more optimism about Slovenia's economic performance this year.

The Paris-based institution and the European Commission (+2.4%) are the most optimistic, while lower growth forecasts for Slovenia have been issued by the International Monetary Fund (+1.4%) and the European bank for Reconstruction and Development (+0.7%).

The anticipated economic growth in Slovenia for this year is slightly higher than the average expected growth in the OECD countries (1.8%).

The OECD expects that growth of Slovenia's GDP will slow down somewhat next year. It is projected to stand at 1.4% despite a projected increase exports. This is 0.9 percentage points below the OECD average expected in 2015.

The institution expects that economic activity in Slovenia, especially domestic spending, will be slowed down by consolidation of public finances and a high unemployment rate. Deleveraging will meanwhile affect investment activity in the corporate sector.

A key priority for the Slovenian economy are quick restructuring as well as continued privatisation and opening up for foreign direct investments, according to the OECD. The latter two are expected to improve corporate management and bring much-needed fresh capital.

Consolidation of public finances should also be continued, the OECD said, again recommending to Slovenia reforms of the public sector in order to boost its efficiency, and active policies to tackle unemployment.

It expects the survey unemployment rate to increase from this year's 9.9% to slightly above 10% in 2015, and then fall to 9.3% in 2016. Inflation is expected to stay well below the OECD average - at 0.4% this year, 0.6% next year and 1% in 2016.

The government is expected to succeed in its intention to reduce budget deficit below 3% of GDP next year. It is expected to drop from this year's 4.4% to 2.9% next year and to 2.4% in 2016.

If this expectation is realised, Slovenia's budget deficit will be lower than in in the OECD countries on average in the next two years.

The OECD also published a projection for 2016, when Slovenia's economy is expected to expand by 2.2%. This is 0.4 percentage points below the expected average growth for the OECD countries.

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