Slovenia Forecast Improved for 2015, Downgraded for 2016

After a robust 2.6% growth in 2014, Slovenia is expected to see a slow-down in its GDP growth this year and next, but the growth is to be more broad-based, the forecast released by Brussels on Tuesday shows.

Compared to the February outlook, the growth forecast for the country is being upgraded by 0.5 percentage points, but downgraded by 0.2 points for 2016. Growth in both years is to be above eurozone average.

Exports and public investment are forecast to remain the dominant drivers of growth in 2015, but private investment is expected to pick up and government consumption is expected to increase strongly in 2016, ending a five-year decline.

However, the report points to a major risk: absorption of funds under the new EU fund programmes may result in a greater decline in public investment in 2016 than currently anticipated.

The government's fiscal position is expected to gradually improve, but public debt will keep increasing, albeit at a slower pace, according to the report.

The forecast for the general government deficit for this year is unchanged from winter and last autumn at 2.9% of GDP and that for 2016 remains the same as in the winter forecast at 2.8% of GDP.

Public debt is expected to keep rising from the average of 28.6% of GDP between 2006 and 2010 to 81.5% of GDP this year and by a further 0.2 percentage points next year, which is still better than eurozone and EU average.

Unemployment is expected to keep falling slowly to 9.4% this year an by a further 0.2 percentage points next year, which is again better than average for the eurozone.

In 2015, wage growth in the private sector is expected to remain modest and public sector wages are set to remain contained. In 2016, more pressure on wage growth is assumed.

Inflation remains at historically low levels and forecast at 0.1% for this year, but the rate is expected to increase to 1.7% in 2016, which is just above euro average.

Source: Sloveniatimes