Annual Review of Slovenian Business and Economy
Ljubljana, 15 December - Being part of a common market of 400 million people has proven to be a mixed blessing for the Slovenian economy. On the positive side, European Union membership has brought about growth in investment, boosted economic growth in the country and rewarded Slovenia's corporate leaders for their innovation by opening new opportunities to expand. However, it has also hit hard those that were ill prepared for the stiff competition of the enlarged EU, particularly the labour-intensive sectors and the food industry.
The new reality has forced Slovenian economists to consider whether Slovenia needs to change its policy of gradual reforms, on which the country has relied so steadfastly since independence, and begin a more determined effort to restructure and create a free market economy. The new government has already promised to work on reducing state involvement in the economy, a move business officials believe is crucial for the future success of the Slovenian economy. Privatisation and the promotion of free competition are set down as priorities of the new government. This is welcome news given that no state-owned companies were privatised in 2004 and that Slovenia has come under increasing criticism for failing to open up to competition in certain markets.
The top economic priority of the new government is the adoption of the euro by 2007. With consensus achieved that the prompt adoption of the euro is in Slovenia's best interest, in June the country took its first step toward a single currency by entering the ERM II exchange rate mechanism - a preparatory phase for euro zone membership. The most recent reports from the EU suggest that Slovenia still has a lot of work to do to achieve its goal, with inflation continuing to be the biggest concern. The government's inflation-cutting efforts were stretched to their limit this year due to the soaring price of crude oil. In the end, the government had to concede that inflation would top its 3.3 percent target by about 0.2 percentage points. However, the soaring price of black gold has not dampened economic growth forecasts, as Slovenia is set to register 4 percent growth for 2004.
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