Slovenia flag Slovenia: Economic and Political Overview

The economic context of Slovenia

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Slovenia has been an open market since its successful economic transition of 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. The weak performance of Slovenia’s main trading partners (the country maintains a long tradition of trading with neighbouring countries, making it vulnerable to its neighbours’ economic health) had already slowed down growth in 2020 (-4.2%) with the situation worsening due to the COVID-19 pandemic, which caused a contraction in all demand components except government consumption. Overall, the IMF estimated the country’s GDP to have grown to 6.3% in 2021 thanks to a rebound in private consumption as well as increased investments both from the public and private sectors. The IMF also forecast growth will reach 4.6% in 2022 and 3.7% in 2023.

Similarly, the government budget was burdened by the measures taken to cushion the effects of the pandemic, which had a total budgetary impact of around 7% of GDP (including wage compensations, exemptions from pension and disability insurance contributions, tourism vouchers, a monthly basic income for self-employed workers and farmers, etc.). Therefore, the overall deficit was estimated at 7% by the IMF, with a forecast of -4.1 for 2022 and -2.5% in 2023. The drop in GDP and the large deficit caused a sharp increase in the debt-to-GDP ratio, which went from 65.6% in 2019 to approximately 77.2% in 2021. It is then projected to gradually fall to 74.9% and 73.0% in 2022 and 2023, respectively, on the back of the economic recovery. Inflation got back to its pre-crisis level in 2021 (at 1.4%) but is expected to keep growing over the course of 2022 (1.8%).

Unemployment has been on a declining trend in recent years, and after an increase to 5.0% throughout 2020 it has stabilized at 4.5% in 2021. Job losses have been uneven and largely concentrated in some service sectors. The unemployment rate is forecast to reach 4.3% in 2022 and 4.2% in 2023 (IMF). According to the latest data from Eurostat, 14.3% of the population is at risk of poverty or social exclusion, well below the EU average of 21.9%. 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.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 54.1953.55e60.8965.4870.13
GDP (Constant Prices, Annual % Change) 3.3-4.26.34.63.7
GDP per Capita (USD) 26,03925,54928,93931,02633,173
General Government Balance (in % of GDP) -0.1-6.8-7.0-4.1-2.5
General Government Gross Debt (in % of GDP) 65.679.8e77.274.973.0
Inflation Rate (%) 1.6-0.11.96.75.1
Unemployment Rate (% of the Labour Force) 4.55.0e4.54.34.2
Current Account (billions USD) 3.253.953.894.144.16
Current Account (in % of GDP) 6.07.46.46.35.9

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Slovenia has a skilled and productive labour force of around 1 million people out of its 2.08 million population. The agricultural sector is declining and reached only 2.1% of the GDP, employing around 4.3% of the population in 2021 (World Bank). Total utilized agricultural area equates to 30.6% of the total area of the country, with 4.8% of agricultural holdings dedicated to organic production (plus 5.4% in the system of control of organic production). Forestry is a key economic factor, with 66% of land area forested and an annual production value of EUR 250 million to the economy. According to the latest figures by the Slovenian Statistical Office, the value of the agricultural output in 2021 is expected to amount to EUR 1,318 million, 20% lower than one year earlier. The value decrease is the consequence of lower volume (by 12%) and higher prices (by 9%).

The industrial sector represents 29.4% of GDP and one-third of employment (34.1%). Historically, the dominant industries in Slovenia have been the forestry, textile, and metallurgical industries. Since the 1980s, the mechanical industries (automobile, tool machines) and the high value-added industries (electronics, pharmacy, and chemicals) have been greatly developed. The World Bank estimates the manufacturing sector to contribute 20% of GDP. Slovenia's industrial production increased by 10.2% in terms of value in 2021, following a 6.2% decline in the previous year (Slovenian Statistical Office).

The tertiary remains the most significant sector in the Slovenian economy. It represents 56.9% of the GDP and employs 61.6% of the total workforce, and has shown a strong growth pattern during the last ten years, especially in the fields of information and communications technology (ITC), financial, commercial services, and retail business. The tourism sector is very dynamic and has been undergoing a period of strong development in recent years (helped by the Strategy for Sustainable Development of Slovenian Tourism for 2017-2021). In 2021, 4 million tourist arrivals and more than 11 million tourists overnight stays in Slovenia were recorded, which is 31% more arrivals and 22% more overnight stays than the previous year.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.3 34.1 61.6
Value Added (in % of GDP) 2.1 29.4 56.9
Value Added (Annual % Change) 3.9 -3.1 -3.8

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 Economic Affairs
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: July 2022