Three-percent economic growth predicted for Slovenia with private spending as the key factor

Meanwhile, the structural fiscal balance is expected to deteriorate

Brussels is forecasting choppy waters for the European economy. Foto: Reuters

The European Commission has issued a drastically improved GDP growth outlook for Slovenia in its winter forecast. It is expecting three-percent growth in 2017 and 2018.

With three-percent growth, Slovenia is substantially above both the Eurozone and the EU averages. The outlook is also considerably better than in the fall, when the European Commission forecast 2.6-percent (2017) and 2.2-percent (2018) growth.

According to the European Commission, private spending will be the most significant engine for growth in 2017 and 2018. Exports, combined with favorable conditions in the labor market and improvements in trade, are also expected to be important growth factors.

Private spending is growing because of increases in employment and wages, while investments are also improving. Private investments are expected to recover with the announcement of several large investment projects. Public investments are also forecast to improve.

Among the risks, the Commission has singled out outside factors, namely geopolitical tension that could slow town trade. In addition, increases in the price of energy and raw materials could have a negative effect on Slovenia’s balance of trade.

DUTB and denationalization are the primary risk factors
The budget deficit forecast for Slovenia has also improved. For this year, the European Commission is forecasting a 1.7-percent deficit. That is expected to decrease to 1.4 percent next year. The original forecasts predicted a two-percent deficit for 2017, and a 1.5-perecnt deficit for 2018.

As a result, the deficit will remain considerably below three percent of the GDP, which is defined as the upper limit by EU budgetary rules. Brussels called off its investigation of Slovenia over excessive deficits.

According to the European Commission’s forecast, the national debt will decrease, but less than was expected last year. In the coming year, Brussels forecasts a 76.7-percent debt, while that debt was forecast to be 76.6 percent in the fall outlook.

Among the chief risks for public finances, the Commission has singled out uncertainty regarding the DUTB bad bank and the possibility of one-time expenses from legal verdicts, such as those related to farmland and forest funds.

T. H.; Translated by J. B.