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Review of the Slovene Economy - December 1999 to November 2000

Ljubljana, 9 December - Higher prices of oil and raw materials had a considerable impact on the economic conditions in the year 2000. Nevertheless, the economic trends were quite positive both in Slovenia and in the world. Worse trading conditions, a higher external debt and the lack of direct foreign investment in particular in the second half of the year, however, caused an imbalance in Slovenia's current payments, while the current deficit was up and got close to the record figures of 1999. Slovenia's foreign currency reserves fell below US$ 4 billion last August for the first time in the last three and a half years, while the external debt rose to US$ 5.78 billion. Due to the fluctuation of oil prices on the world market the government adopted in April a price-setting model for petrol and, in October, also for natural gas.

Slovenia continued the alignment of its legislation with EU standards. While insurance legislation was passed, the telecommunications bill, which should determine the rules of the game before Slovenia opens its telecommunications market for foreign competition in 2001, had less luck. Brussels criticised Slovenia for not having privatised banks, insurance companies and the biggest state-owned companies. In the year of political changes personnel replacements in state-owned companies and other state-run institutions were frequent. The attempt to merge the Port of Koper and the forwarding agent Intereuropa into a logistics centre, which would be one of the biggest in the Adriatic region, has failed. Still, in the autumn the Port of Koper and its partners were granted a licence for the management of the container berth in the Italian port of Trieste. A number of takeovers took place in the year 2000, in particular in the production of beverages, in the trade and dairy sectors as well as in the chemical industry. Slovene companies further expanded their businesses in the region of the former Yugoslavia. The open questions in the relations with Croatia regarding the Krsko nuclear power plant and the debt of the bank Ljubljanska banka have remained unsolved.

Slovenia's economic growth in 2000, previously expected to reach 4.75 percent, will probably be slightly lower. The inflation rate, however, will be higher than the planned 6.1 percent. Due to a number of unfavourable international factors it is likely to reach 8.9 percent. Slovenia's industrial production rose by 7.2 percent in the first ten months of 2000 in comparison with the same period of 1999. The unemployment rate was by 1.4 percent lower in September than a year before, reaching 11.7 percent. Measured at ILO standards it stood at just 6.7 percent. The average gross wages rose by 1.5 percent in real terms between January and September in comparison with the same period last year.

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© STA, 2000