EU Commission upgrades Slovenia's growth forecast

Brussels, 13 February - The European Commission has upgraded Slovenia's economic growth forecast to 1% for this year and 2% for 2024, up by 0.2 and 0.3 percentage points, respectively, from its autumn forecast. Inflation is expected to slow to 6.1% this year, an improvement from 6.5% projected in the autumn.

Brussels, Belgium
The seat of the European Commission.
Photo: Thierry Monasse/STA

In its winter forecast released on Monday, the Commission downgraded the forecast for Slovenia's GDP growth last year to 5.1%, from 6.2% projected in November. The Slovenian Statistics Office will release 2022 GDP growth data on Tuesday.

Over the first three quarters of 2022, private consumption continued to increase and investments proved robust, the report notes. Imports increased significantly faster than exports. In the third quarter, the economy contracted quite strongly.

"Slowly improving economic sentiment over the last months suggests that this trend could be partly reversed in the final quarter of the year," reads the report, noting that employment has remained strong and the industrial production indicator also improved.

Continuing global economic uncertainty and the tightening of financial conditions are expected to limit growth at the beginning of this year. However, as employment remains high and wage growth is set to be robust, growth is projected to improve starting from the second half of the year.

While private consumption is expected to grow only modestly after its fast increase in 2022, investment is forecast to continue increasing, supported in particular by public investment. Export growth will accelerate, but imports will remain strong.

Inflation in the last quarter of 2022 was a bit lower than in the quarter before. Overall, inflation averaged 9.3% in 2022, 0.1 percentage points more than projected in the autumn forecast.

Next year headline inflation is projected to decrease to 6.1% before falling to 3.5% in 2024 on the back of assumed economic growth and moderation of energy prices.

Core inflation, which does not take into account energy and food prices, is expected to remain elevated due to general price and wage growth.

The Commission releases two comprehensive forecasts, one in spring and one in autumn, as well as two interim forecasts in winter and summer which do not include projections on public finances.

The latest forecast will be discussed at the Eurogroup meting later today with Finance Minister Klemen Boštjančič on hand.

© STA, 2023