Economic Outline

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.

Any Comment About This Content? Report It to Us.