It said sentiment reached 8.5 points. That was 0.5 point higher than in the previous month and 2 points higher than in December 2015, mainly on account of improved confidence in manufacturing, construction and among consumers.

Analysts said sentiment could improve further in coming months as economic prospects in other European Union members, which include Slovenia's main trading partners, remain favourable while more investment is expected in Slovenia next year due to a higher inflow of EU funds.

Export-oriented Slovenia, which narrowly avoided an international bailout for its banks in 2013, returned to growth in 2014 and the government expects the economy will expand by 2.9 percent next year from 2.3 percent seen in 2016.

Last week, the Bank of Slovenia said unemployment was expected to fall to 7.4 percent in 2017 from 8.1 percent this year. However, it warned that the government needs to pursue structural reforms including cutting red tape and enhancing privatisation.

Reuters