Slove­nia

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In 2015, the Slove­nian econ­omy is ex­pected to con­tinue its re­cov­ery and grow by be­tween 1.7% and 2.1%, ac­cord­ing to fore­casts of the World Bank, the Euro­pean Bank for Re­con­struc­tion and Devel­op­ment, and the In­ter­na­tional Mon­e­tary Fund. Ex­ports will con­tinue to be a key driver for the coun­try’s eco­nomic growth, sup­ported by the cheaper euro and the eco­nomic re­vival of the Euro­zone coun­tries, Slove­nia’s main ex­port mar­kets. Stronger pri­vate con­sump­tion, backed by low in­fla­tion, will be an­other eco­nomic an­chor.

Slove­nia's econ­omy bounced back af­ter a two-year re­ces­sion in 2014. The coun­try's an­nual gross do­mes­tic prod­uct (GDP) growth reached 2.6% thanks to ris­ing ex­ports, and state and EU-funded in­vest­ments. The 2014 eco­nomic per­for­mance is seen as the first sign of re­cov­ery af­ter the coun­try was hit by the global eco­nomic down­turn in 2009. De­spite the brighter eco­nomic devel­op­ment, Slove­nia should ease the state con­trol of the econ­omy by speed­ing up pri­vati­sa­tion, rein in the pub­lic debt, and fur­ther strengthen bank gov­er­nance in or­der to keep the eco­nomic growth mo­men­tum.

In Septem­ber 2014, the Slove­nian par­lia­ment en­dorsed the cab­i­net line-up of prime min­is­ter-des­ig­nate Miro Cerar. The cab­i­net stated that its key pri­or­i­ties are con­tin­u­ing a re­stric­tive fis­cal pol­icy through low­er­ing ex­pen­di­ture and more ef­fec­tive col­lec­tion of taxes. The com­pet­i­tive­ness of the Slove­nian econ­omy is also to be im­proved through cor­po­rate re­struc­tur­ing and con­tin­u­ing the pri­vati­sa­tion process.

In terms of ease of do­ing busi­ness reg­u­la­tions, Slove­nia stepped down by five po­si­tions to the 51st place in World Bank's Do­ing Busi­ness 2015 re­port. In the pre­vi­ous year's edi­tion the coun­try ranked 46th. Slove­nia fa­cil­i­tated re­solv­ing of in­sol­vency

for com­pa­nies, ac­cord­ing to the re­port.

Slove­nia also re­treated in terms of busi­ness environment com­pet­i­tive­ness by rank­ing 70th out of 144 coun­tries in the Global Com­pet­i­tive­ness Re­port 2014-2015 pub­lished by the World Eco­nomic Fo­rum. The coun­try's Global Com­pet­i­tive­ness In­dex score was 4.2 points, while in the 2013-2014 edi­tion it was 4.3 points, rank­ing the coun­try 62nd among 148 economies. Ac­cord­ing to the lat­est re­port, in­ef­fi­cient govern­ment bu­reau­cracy, ac­cess to fi­nanc­ing, and high tax rates are the main fac­tors, which weaken the coun­try's com­pet­i­tive­ness.

Slove­nia is the least de­pen­dant on re­mit­tances coun­try in South­east Europe, ac­cord­ing data of the World Bank. In 2014, the re­mit­tances sum to­talled 591 mil­lion euro and ac­counted for 1.6% of the coun­try's GDP, lower than in the other SEE coun­tries. How­ever, af­ter the world eco­nomic cri­sis, the im­por­tance of re­mit­tances for the Slove­nian econ­omy has grown.

The coun­try's GDP in­creased by a real 2.6% and to­talled 24.5 bil­lion euro in 2014, ac­cord­ing to data of the Sta­tis­ti­cal Of­fice of the Re­pub­lic of Slove­nia (SURS).

Fi­nal con­sump­tion, which con­trib­uted 70.3% to the GDP, amounted to 17.2 bil­lion euro, up 0.1% in value terms. Gross cap­i­tal for­ma­tion was up by 3.6%, con­tribut­ing 20.1% to the GDP. Both ex­ports and im­ports in­creased, by 6.3% and 4.1%, re­spec­tively.

In­dus­trial out­put was up by 1.6% in 2014, ac­cord­ing to SURS. The growth was fu­elled mainly by the 3.6% up­trend in the man­u­fac­tur­ing industry, while the min­ing, and gas, steam and air con­di­tion­ing sup­ply sec­tors dropped by 4.2% and 13.8%, re­spec­tively.

Slove­nia reg­is­tered av­er­age an­nual in­fla­tion of 0.2% in 2014, com­pared to 1.8% in­fla­tion a year ago, SURS data showed. In 2014 the high­est av­er­age an­nual in­crease in consumer prices, of 3.6%, was reg­is­tered in al­co­holic bev­er­ages and to­bacco, fol­lowed by mis­cel­la­neous goods and ser­vices, and restau­rants and ho­tel ser­vices, where prices in­creased by 1.6% and 1.1% re­spec­tively. The consumer groups that recorded the high­est de­fla­tion, of 1.9%, were com­mu­ni­ca­tions, fol­lowed by Fur­nish­ing, house­hold equip­ment and main­te­nance with a 1.2% de­cline in prices, and cloth­ing and footwear prices inched down by 0.9%.

Un­em­ploy­ment in Slove­nia nar­rowed to 13.0% of the to­tal labour force in De­cem­ber 2014 from 13.5% a year ear­lier, ac­cord­ing to data of SURS.

The em­ployed population aged 15 years and older was 799,958 in De­cem­ber 2014, up by 1.1% y/y. The self-em­ployed per­sons ac­counted for 10.4% of the to­tal em­ploy­ment in the coun­try. The youth (population aged 15-24) un­em­ploy­ment rate went down to 30.5%, com­pared to 33.8% in the cor­re­spond­ing month of the pre­vi­ous year.

Loans to non-fi­nan­cial cor­po­ra­tions fell by 20.8% y/y to 11.2 bil­lion euro in De­cem­ber 2014, ac­cord­ing to cen­tral bank data. House­hold loans were down by 1.7% to 8.76 bil­lion euro. House pur­chas­ing loans climbed by 0.8% to 5.35 bil­lion euro. Consumer loans marked a 4.9% de­crease to 2.1 bil­lion euro. The bad loans in Slove­nia's banking sys­tem, which re­quired a govern­ment bail-out in late 2013, to­talled 4.45 bil­lion euro at the end of De­cem­ber 2014, ac­cord­ing to the coun­try's cen­tral bank. A year ago, the bad loan port­fo­lio of the lo­cal banks was higher at 5.52 bil­lion euro. The share of loans whose re­pay­ment has been de­layed by 90 days or more ticked down to 11.9% at the end of De­cem­ber 2014 from 13.4% a year ear­lier.

The gross ex­ter­nal debt in­creased, to­talling 44.4 bil­lion euro at the end of De­cem­ber 2014, Bank of Slove­nia re­ported. It widened by 11.2%, or 4.5 bil­lion euro com­pared to De­cem­ber 2013.

As of end-De­cem­ber 2014 long-term li­a­bil­i­ties amounted to 39.5 bil­lion, or 88.9% of the to­tal debt, and short-term li­a­bil­i­ties to­talled 4.9 bil­lion euro equal to 11.1% of the to­tal debt.

The govern­ment debt stood at 22.1 bil­lion euro, or 49.9% of the to­tal debt, up by 43.5% y/y.

In 2014 the cur­rent ac­count bal­ance was a pos­i­tive 2.6 bil­lion euro, com­pared with a sur­plus of 2 bil­lion euro in 2013, ac­cord­ing to the cen­tral bank.

The trade bal­ance turned to a sur­plus of 355 mil­lion euro in 2014 from a deficit of 565 mil­lion euro in 2013, ac­cord­ing to SURS.

Ma­chin­ery and trans­port equip­ment was the lead­ing prod­uct group in Slove­nia's ex­ter­nal trade, ac­count­ing for 36.3% of the to­tal ex­ports and 29.7% of the to­tal value of im­ports.

Source: In­ter­na­tional Mon­e­tary Fund (IMF) World Eco­nomic Out­look Data­base – April 2015

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