The growth of Slovenia's GDP is expected to slow down to 3.9% in 2019, which is nevertheless an upgrade compared to the OECD's previous forecast for Slovenia for next year (3.4%).
The forecast for 2018 is close to the forecast by the IMAD government macro-economic think tank - 5.1% for this year and 3.8% for 2019.
The OECD says in its report on Slovenia that its economy is projected to continue its strong expansion in 2018, with private consumption being boosted by strong real income growth and a decade-high level of consumer confidence.
The growth of private consumption is expected to increase from last year's 3.2% to 4.2% in 2018, and to slow down to 3.2% next year.
The favourable financial conditions and the EU structural funds will underpin business and public infrastructure investment, the report says.
Exports are meanwhile expected to decelerate as higher wages undermine external competitiveness, while imports are to be bolstered by higher domestic demand and tighter capacity constraints.
Exports are expected to grow by 8.8% this year and by 6.8% in 2019, while imports are expected to increase by 9.8% and 7.1%, respectively.
Government consumption is projected to grow by 2.3% this year and by 1.4% in 2019, reflecting the relaxation of previous austerity measures.
The favourable economic conditions have reduced unemployment to its lowest level in a decade. The survey unemployment rate is expected to drop from last year's 6.6% to 5.3% this year, and further to 4.8% in 2019.
The developments on the labour market have already led to shortages of qualified labour force in certain sectors, but wage growth has remained moderate.
Inflation is expected to increase from 1.6% to 2.3% this year on the back of higher food and energy prices, and to 2.7% in 2019.
The OECD notes that Slovenia's fiscal policy is highly expansionary, implying little progress in securing fiscal sustainability, adding that the country's macroeconomic policies fail to address future ageing-related fiscal challenges.
The organisation believes that continued strong growth in Slovenia depends on structural reforms, including more intense privatisation efforts, and boosting the low activity rate of older workers through additional pension reform.
Below is an overview of the latest forecasts.
Forecaster (month of forecast) 2018 2019 2020
---------------------------------------------------------------- IMF (April) 4.0% 3.2% / IMAD (March) 5.1% 3.8% 3.2% EU Commission (May) 4.7% 3.6% / Central bank (December) 4.2% / 3.4% OECD (May) 5.0% 3.9% / EBRD (May) 4.0% 3.3% / ----------------------------------------------------------------
