Review by Christos T. Panagopoulos –
The Institute of Macroeconomic Analysis and Development (IMAD), the government’s forecaster, has downgraded its forecast for 2014. It projects that Slovenia’s economy will shrink by 0.8% in 2014, compared to its June estimate of a 0.2% contraction. Moderate growth, of 0.4%, is expected in 2015.
The international environment has improved since June, as positive signals are coming from Slovenia’s trading partners. However, bank restructuring and fiscal consolidation continue to weigh down on recovery, IMAD director Boštjan Vasle told the press.
Fiscal consolidation is urgent, but no country has managed to consolidate its public finances without a negative impact on economic activity and the labour market in the same year, he said.
IMAD projects that bank lending will continue to decline through 2014, albeit at a slower pace, but the contraction is expected to stop towards the end of the year.
Exports are to rise 2% this year and 3% in 2014, exerting a positive impact on growth. Nevertheless, Vasle warned that export companies were also being affected by domestic problems, in particular bank restructuring.
The GDP forecast for this year remains unchanged at -2.4%, roughly in line with international forecasts that range from -2% to -2.5%.
Source: Slovenia Times