STA, 6 November 2019 - The European Bank for Reconstruction and Development has downgraded its May forecast for Slovenia's gross domestic product (GDP) growth for this year by 0.3 of a percentage point to 3%, while keeping the projection for 2020 at 2.8%.
Announcing the downgrade on Wednesday, the bank said that the main risk was the weaker demand by main trade partners, with the Slovenian economy strongly relying on exports, especially to the eurozone countries.
According to the EBRD, economic recovery in Slovenia has continued in 2019, although with a slower tempo than in the past two years, when GDP growth was at 4.5% on average, one of the highest rates in the EU.
Slovenia's economy grew by 2.9% in the first half of the year year-on-year, fuelled by domestic consumption encouraged by higher investments and private consumption.
The latter was boosted by the strong labour market, with the unemployment rate standing as low as at 4% in June, and by the growth of income brought by a higher minimum wage, the bank noted.
The favourable financing conditions resulted in an increased lending activity, which supported investments, while business sentiment has been above the long-term average. The growth of exports has been higher than the growth of imports.
The EBRD expects that the trend of decreasing general government debt is to continue, with the fiscal situation of the country having improved significantly in recent years. General government debt, in relative terms, is expected to decrease from 83% of GDP in 2015 to 66% at the end of this year.
The bank's correction follows the downgrade by the International Monetary Fund (IMF) in mid-October from 3.4% to 2.9%, and the downgrade by the government macroeconomic think-tank IMAD by 0.6 percentage points to 2.8% in mid-September.