OECD Further Upgrades GDP Forecast for Slovenia

The OECD believes the Slovenian economy will continue to expand on the wings of strong exports and public investment in infrastructural projects, partly funded by the EU.

The forecast for 2016 remains at 1.9%, down 0.3 points from the original, November forecast.

The unemployment rate is expected to decrease from this year's 9.4% to 9.1% in 2016, while the general government deficit is to drop from 2.9% of GDP to 2.5%.

Consumer prices are forecast to drop by 0.4% on average this year, while rising by 0.7% next year.

Fiscal consolidation, the relatively high unemployment rate and companies' deleveraging will continue to affect domestic consumption, the OECD said.

In 2016, growth will be affected by a slower public investment, while private investment and consumer spending are expected to rise.

OECD believes Slovenia's key priority should be to speed up corporate deleveraging and decrease the share of bad loans in banks. The organisation also highlighted the need for structural reforms, especially the cutting of red tape and efficiency improvements in the public administration.

Growth in Slovenia could pick up further with a more active labour market policy, while privatisation and FDI would bring fresh capital and better corporate governance, according to the Paris-based organisation.

The OECD also upgraded its growth forecast for the eurozone today while downgrading the outlook for the world.

Source: The Slovenia Times