Paris – The Organisation for Economic Co-operation and Development (OECD) has slightly upgraded its forecast for Slovenia’s GDP in 2020, projecting that it will fall by 7.5% this year, while also downgrading the expected rebound in 2020, to 3.4%.
In the first half of June, the OECD said that Slovenia’s economy was expected to shrink by 7.8% this year, and then grow by 4.5% in 2021.
In the latest report, issued on Tuesday, it says that the effects of the Covid-19 pandemic would continue to disturb economic activity until at least mid-2021.
“From then until the end of the projection horizon in 2022, investment and exports will be the main engines of growth thanks to higher demand in trading partner countries, improvements in the epidemiological situation,” the report adds.
The OECD notes that economic activity in Slovenia picked up in the third quarter of 2020, after the end of the lockdown in mid-May. However, the new restrictions introduced in the autumn are affecting economic activity, in particular in services sectors.
“Activity is likely to slow again as the virus spreads. Demand is projected to bounce back in 2021 before receding to a more stable path,” the report says, adding that government spending and household consumption would maintain the recovery until the end of 2021.
The export-oriented sectors are expected to benefit from stronger EU demand from 2021, but the outlook is highly uncertain, as a further significant deterioration of the health situation could lead to prolonged restrictions that would stall the economic recovery.
The OECD also notes that unemployment is increasing, calling for reinforced active labour market policies targeted on specific groups, such as long-term and older unemployed persons.
“Government support to households and businesses most affected by the crisis, in particular in the tourism and entertainment sectors, should continue.”
The Paris-based organisation also issued a 2022 forecast for the first time, saying it expected a 3.5% improvement compared to 2021.