Euro Challenge
November 2016
Slovenia
An overview of Slovenia’s economy
Did you know…?
History
Some
scholars
believe that a description of
how
Slovene
farmers
contractually consented to be
governed influenced Thomas
Jefferson's drafting of the
Declaration of Independence.
Geography
Four
major
European geographic regions
meet in Slovenia: the Alps, the
Dinaric area, the Pannonian
plain and the Mediterranean.
Sports Mountaineering and
climbing have a long tradition
in Slovenia and Slovenian
mountaineers were among the
first to ascend some of the
most difficult routes in the
Himalayas.
Food The Potica is a
traditional Slovenian cake
made by rolling up a layer of
dough covered with walnuts.
Fun Fact Slovenia's previous
Prime Minister, Borut Pahor,
promised to clean the cleats of
the national soccer team if
they managed to secure a
place at the 2010 World Cup
in South Africa. After they
qualified, he followed through
on his promise!
In part due to its dependence on trade, this role model for successful
economic liberalization and European integration was impacted in the
recent crisis. Slovenia exited recession in 2013.
Before its independence in 1991, Slovenia
realized
strong
Slovenia was already the most economic growth in the years
productive
of
the
Yugoslav running up to the global financial
Republics. It was the trading hub of crisis, boosting job creation and
former Yugoslavia and enjoyed capacity
utilization.
Prudent
relatively broad cultural, civic and income policies had helped
economic
liberties.
Licensing contain wage pressures and
agreements
with
Western keep inflation relatively low. The
companies enabled technology high dependency on trade
transfers to Slovenian factories. rendered Slovenia sensitive to
Slovenia's economy was therefore the economic conditions of its
well prepared for the economic main trading partners.
liberalization that followed after
independence. Since then, the When the economic crisis hit and
authorities have vigorously pursued global demand slumped, the
diversification of trade, privatization Slovenian economy contracted
of
domestic
industries,
and sharply.
The
Slovenian
integration
into
international government reacted with a
institutions.
number of stimulus measures,
including subsidies to companies
Slovenia joined the European Union for shorter working hours. It
in 2004 with broad popular support. dipped back into recession in
It was the first of the so-called 2012 but is now experiencing
“New” member states to adopt the slight growth in GDP again.
euro on January 1, 2007. It became Long-term policy challenges
the 13th member of the euro area. include the need to enact reforms
Over the last decade, those to raise the economy’s growth
Slovene industries that are highly potential and ensure that public
export-oriented have performed finances are sustainable given
strongly. Many manufacturing and the population aging.
engineering companies managed to
integrate very well into the supplychains of European car companies.
Slovenia
benefits
from
its
geographical location in the heart of
Europe
and
well-maintained
infrastructure, which enables it to
serve as a transit hub for the
economies of the Western Balkans.
Euro Challenge
Slovenia’s Economy – Key Facts
•
The Republic of Slovenia has a population of about 2 million people
in an area slightly smaller than the US state of New Jersey, making
it the fourth-smallest country in the euro area.
•
Slovenia ranks in the lower spectrum among the EU countries in
terms of GDP per capita. Slovenia's economy is dominated by the
services sector (60% of GDP) and is well-integrated in Europe’s
common market.
•
The World Economic Forum (WEF) Global Competitiveness Report
for 2015/2016 ranked Slovenia 59th out of 140 countries in terms of
competitiveness. The innovation-driven economy ranked favorable
in education, health, and infrastructure. Access to financing,
inefficient government bureaucracy and restrictive labor regulations
are seen as the most problematic factors for doing business.
•
The World Bank’s Doing Business Report ranked Slovenia 51st out
of 189 countries in 2015. The country made it easier to resolve
insolvent firms.
•
According to the European Commission’s Autumn 2015 forecast,
Slovenia is expected to grow by 2.6% in 2015. The recovery is
forecast to continue at a slightly slower pace as EU funded
infrastructure projects reach completion. Slovenia's budget deficit
and total debt levels have been increasing rapidly, thanks in part to
measures that recapitalized the banking sector, though
consolidation measures will help in the years ahead. The deficit
should fall to 2.9% of GDP in 2015, and total debt should stabilize at
about 84.2% of GDP.
References
•
https://www.gfmag.com/global-data/country-data/slovenia-gdp-countryreport
•
http://ec.europa.eu/economy_finance/eu/countries/slovenia_en.htm
•
http://europa.eu/abc/european_countries/eu_members/slovenia
•
http://www.oecd.org/slovenia
•
http://www.imf.org/external/country/svn
•
http://www.doingbusiness.org/ExploreEconomies/?economyid=169
•
https://www.cia.gov/library/publications/the-world-factbook/geos/si.html
•
http://reports.weforum.org/global-competitiveness-report-20152016/economies/#indexId=GCI&economy=SVN
2016
Exports Export performance
was hurt by the economic
crisis as Slovenia's main
trading partners weakened,
but exports have performed
much better recently – rising
over 5% in 2014. Main export
goods are transport vehicles,
electrical machinery, furniture,
clothing, and chemicals.
Employment Real wages
have been dropping as a
result of the weak growth and
labor market outlook as well
as the budgeted cuts in public
sector wages. Falling unit
labor costs are helping to
boost
competitiveness.
Unemployment peaked at
around 10% in 2013/2014 but
is set to decline.
Inflation Prices will decrease
by 0.6% in 2015 but are set to
rise, reaching +0.8% in 2016.
Education Slovenia has a
highly educated workforce,
with skills concentrated in
technical and engineering
areas. Higher education was
expanded at an impressive
pace over the last decade.
Corporate
Sector
Many
companies, particularly banks,
suffer from high debt levels
and
could
benefit
from
governance reforms.