Slovenia flag Slovenia: Economic and Political Overview

The economic context of Slovenia

Economic Indicators

Slovenia has been an open market since its successful economic transition in the 2000s. As a member of the European Union since May 2004 and of the Eurozone since 2007, Slovenia is an advanced, independent, and stable country. After contracting due to the COVID-19 pandemic, Slovenia’s GDP rebounded in 2021 and continued its positive trend in 2022 (+2.5%). In 2023, Slovenia's real GDP is estimated to have grown by 1.3% (EU Commission). Private consumption exhibited modest growth during the initial three quarters, while construction investment experienced significant expansion. Conversely, investments in machinery and equipment declined. For 2024, GDP is projected to expand by 1.9%, followed by a further increase of 2.7% in 2025. The beginning of 2024 is anticipated to witness restrained growth due to weak sentiment and subdued demand for exports. However, sustained robust investment, bolstered by the Recovery and Resilience Plan (RRP), coupled with the resurgence of demand in export markets, is expected to enhance growth prospects over the forecast period. Moreover, both private and public consumption are anticipated to accelerate, propelled by a resilient labor market and rising wages.

Fitch Ratings anticipated the general government deficit to reach approximately 3.8% of GDP between 2023 and 2024, a rise from the 3% recorded in 2022. The government has earmarked EUR 700 million (1.1% of GDP) for post-flood reconstructions in 2023 and EUR 1.1 billion in 2024. The fiscal deficit should narrow to around 2% of GDP in 2025. The public debt-to-GDP ratio is expected to decrease gradually to 62.6% by 2025, down from 74.7% in 2022 (IMF). Significant cash reserves, amounting to 13% of GDP in 2Q23, offer flexibility in financing. While higher financing costs may lead to a gradual rise in debt service expenses, the favorable maturity profile, with a weighted average maturity of around 10 years, will mitigate the immediate impact. Inflation saw a significant decline throughout 2023, particularly in energy, with food prices also beginning to slow down in the last quarter. The average inflation rate for the year stood at 7.2%. In 2024, headline inflation is expected to decrease to 2.9%, driven by moderating energy costs and subdued demand. Despite ongoing wage pressures, HICP inflation is forecast to drop further to 2.0% in 2025 (EU Commission).

Unemployment has been on a declining trend in recent years: it was estimated at 3.6% in 2023 and should remain relatively stable in the upcoming future (IMF). According to the latest data from Eurostat, around 13% of the population is at risk of poverty or social exclusion, the second-lowest ratio in the EU. Nevertheless, poverty amongst the senior population, consisting of mostly women and marginalized minorities, is an area of severe concern; to address this, the government deployed a specific strategy for elder people. Overall, the World Bank estimated the country’s GDP per capita (PPP) at USD 50,032 in 2022, just below the EU average.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 60.1168.3973.8778.8183.11
GDP (Constant Prices, Annual % Change) 2.52.02.22.62.8
GDP per Capita (USD) 28,52732,35034,91437,26939,326
General Government Balance (in % of GDP) -3.9-3.9-2.7-2.2-1.8
General Government Gross Debt (in % of GDP) 72.668.566.564.763.4
Inflation Rate (%) n/a7.44.23.12.4
Unemployment Rate (% of the Labour Force) 4.03.63.83.94.0
Current Account (billions USD) -0.613.042.832.492.39
Current Account (in % of GDP) -1.04.43.83.22.9

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Slovenia has a skilled and productive labor force of around 1.05 million people out of its 2.1 million population. The agricultural sector is declining and accounts for only 1.8% of the GDP, employing around 4% of the population (World Bank, latest data available). The country counts 68,331 agricultural holdings, with the total utilized agricultural area equating to 30.6% of the total area, and 5.5% of agricultural holdings dedicated to organic production. Forestry is a key economic factor, with 66% of the land area forested and an annual production value of EUR 250 million contributing to the economy. According to the latest figures by the Slovenian Statistical Office, the nominal value of agricultural production was expected to amount to EUR 1,575 million. The value of crop production was projected to decrease by 12%, due to a volume increase of 5% and a price decrease of 16%.

The industrial sector represents 28.1% of GDP and almost one-third of employment (30%). Historically, the dominant industries in Slovenia have been forestry, textiles, and metallurgy. Since the 1980s, mechanical industries (automobiles, tool machines) and high-value-added industries (electronics, pharmacy, and chemicals) have experienced significant development. The World Bank estimates the manufacturing sector to contribute 20% of GDP. Slovenia's industrial production saw a 5.3% decrease in 2023. Comparatively, the mining and quarrying sector saw growth of 7.4% year over year. However, the crucial manufacturing sector declined by 8.1%, and the electricity, gas, steam, and air conditioning supply sector experienced a significant downturn of 36.3% (Slovenian Statistical Office).

The tertiary sector remains the most significant in the Slovenian economy. It represents 58% of the GDP and employs 65% of the total workforce, showing a strong growth pattern over the last ten years, especially in information and communications technology (ITC), financial, commercial services, and retail business. The tourism sector is dynamic and has experienced strong development in recent years. After suffering due to the COVID-19 pandemic, Slovenia welcomed over 6 million visitors in 2023 who spent more than 16 million nights, representing the highest tourism figures on record according to data from the country's Statistical Office. Retail sales turnover in Slovenia went down 11.5% in 2023, following a 20.3% increase in the previous year, according to the same source. According to the latest figures from the European Banking Federation, the Slovenian banking sector comprises 11 commercial banks, three savings banks, and two branches of foreign banks.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.1 30.0 65.9
Value Added (in % of GDP) 1.7 29.0 57.8
Value Added (Annual % Change) 2.2 2.1 8.1

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
68,3/100
World Rank:
48
Regional Rank:
28

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.75/10
World Rank:
34/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

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Sources of General Economic Information

Ministries
Ministry of the Economy, Tourism and Sport
Ministry of Finance
Statistical Office
Statistical Office
Central Bank
Bank of Slovenia
Stock Exchange
Ljubljana Stock Exchange
Economic Portals
State Administration Portal on business issues
Slovenian Business Portal
 

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Latest Update: May 2024