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