STA, 22 November 2019 - The National Assembly voted 49:41 on Friday night to pass the budget acts for 2020 and 2021, in what was the first major vote for the minority government and an important test of the coalition's strength. The populist National Party (SNS) and both minority MPs provided the missing votes.

The vote was on the agenda just weeks after the Left walked away from an agreement that provided the government with a parliamentary majority, raising the possibility that the budget bills will not be adopted in time.

Tellingly, the opposition staged a show of force in committee last week when it joined forces to outvote the government and swell budget spending, mostly on account of a EUR 140 million increase in the annual budget transfer to municipalities.

But with the help of the SNS, the coalition voted down the amendment to bring the budget within the framework that the Finance Ministry says complies with the constitutional balanced-budget rule.

Budget revenue and expenditure will be at record levels both years, a reflection of the long period of economic growth, but slightly below original plans, as the treasury heeded warnings that growth is gradually slowing down.

For 2020 budget expenditure is capped at EUR 10.36 billion and revenue at EUR 10.77 billion, making for a surplus of EUR 415 million.

In 2021 expenditure will rise to EUR 10.45 billion and revenue is projected to climb to EUR 11.1 billion, with the surplus swelling to EUR 657 million.

Finance Minister Andrej Bertoncelj, who had threatened to resign unless the budgets remain within the treasury's bounds, said after the vote that spending was focused on social issues and development. He said the budgets would "improve the prosperity of everyone".

While the EU Commission has recently said Slovenia's budgetary plans for next year contain risks that could lead to non-compliance with EU budget rules, Bertoncelj said the budgets were putting Slovenia on track to leave the group of countries at risk of breaching EU budget rules.

As for the political aspect, Bertoncelj said the budgets were "a major step forward" that "shows the coalition is strong". "It's important that we have the budgets and that the government continues doing its job."

Whereas the coalition was able to deflect the increase in budget transfers to local communities, the opposition nevertheless squeezed through amendments that raised spending by a few million.

Even the coalition contributed the votes earmarking EUR 400,000 to the Celje Mountaineering Association which will be spent on rebuilding two mountain huts destroyed in separate fires last year and last month.

An additional EUR 6 million has been set aside for investments in preschool buildings and EUR 5 million for remediation works on a landfill in the Savinja Valley.

And a million euros each this year and next will be spent restoring the Žiče Charterhouse, an earmark proposed by the SNS. Žiče is located in the district where SNS leader ran in the 2018 election.

These amendments were confirmed as part of the budget implementation act, a technical piece of legislation that gives the government authority on budget management and borrowing.

This act also contains a ceiling on borrowing, which is set at EUR 1.6 billion for 2020 and EUR 2.7 billion for 2021. The majority of the borrowing will be used to refinance existing debt in order to reduce debt servicing costs.

The government will also be allowed to issue state guarantees of up to EUR 800 million in both years.

Most of the guarantees will go towards building a new rail track to the Koper port, but a quarter is to be spent on a special guarantee for housing loan that the government plans to put in place after the central bank severely tightened rules on consumer lending.

The budget package includes a special piece of legislation that curtails pay rises in the public sector, adopted after the government forecaster, IMAD, downgraded its GDP growth forecast for the year and warned that the economy was slowly cooling down.

To shave an estimated EUR 100 million off the annual public sector wage bill, senior civil servants will forfeit a portion of performance bonuses and limits will be put in place regarding payment for higher workload.

The act also includes a 6.5-euro across-the-board increase in pensions in December 2020, assuming GDP growth exceeds 2.5%; the latest forecasts indicate Slovenia's economy should expand by just under 3% next year.

STA, 21 November 2019 - The Organisation for Economic Co-operation and Development (OECD) has downgraded Slovenia's GDP growth forecast for 2019 from 3.4% to 3.1% after already downgrading it slightly in May. Forecast for 2020 and 2021 indicate similar growth of 3.0% and 3.1%, respectively.

The OECD says that private consumption will continue to be the main driver of growth, sustained by higher wages and solid employment gains.

"Uncertainty about the external environment will slow the pace of new business investment. Improvements in export performance will slow with rising labour unit costs."

Fiscal policy will remain supportive of growth in the coming two years, driven by higher public sector wages and social transfers, the OECD says.

Measures to restrict pathways to early retirement would mobilise older workers, while accelerating privatisations and decentralising wage bargaining, would contribute to improve labour allocation, and alleviate labour shortages and wage pressures, the OECD says.

Meanwhile, economic growth is projected to remain broadly stable in 2020 and 2021. A deterioration in cost competitiveness, owing to higher labour costs and weak productivity gains, will hold back export growth, says the OECD.

Investment will continue to slow somewhat in the next two years, despite higher construction activity, as spending on machinery and equipment weakens. A slow recovery of exports and business investment is expected towards the end of 2021.

The main upside risk stems from a faster recovery of business sentiment and business investment growth. On the downside, prolonged tensions in the international environment could lead to lower-than-anticipated export market growth.

Today's downgrade comes after the OECD has already changed Slovenia's forecast from 3.6% to 3.4% for 2019 in May. However, at that time the OECD also improved the country's forecast for 2020 from 2.7% to 3.1%.

This forecast for Slovenia for 2019 is the most optimistic of all forecast updated in recent weeks, both domestic and foreign.

The European Bank for Reconstruction and Development expects Slovenia's GDP to grow 3.0%, the International Monetary Fund (IMF) 2.9%, the government macroeconomic think tank IMAD 2.8% and the European Commission 2.6%.

Banka Slovenije is yet to update its forecast this fall after saying in May that the country's economy is expected to grow 3.2% this year.

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.

STA, 20 October 2019 - Central bank Governor Boštjan Vasle and Finance Ministry State Secretary Metod Dragonja attended this week's autumn meetings of the World Bank Group and the International Monetary Fund (IMF) in Washington where they said that Slovenia's economic condition was currently good despite risks to the global economy.

 Vasle, who mostly took part in meetings and discussions at the IMF, said in a statement for the Slovenian media that the IMF had downgraded its global growth projection for this year to 3% and highlighted the risks to the global economy that could potentially further diminish growth.

"We're talking about a trade war which is currently the strongest limiting factor for economic growth. There are still uncertainties related to Brexit and slowing Chinese growth," said the governor.

"Regarding these weaker projections, the IMF says that all macroeconomic policies should be implemented. So far, mostly monetary policies of all the biggest central banks have been striving for stabilisation, but the IMF is highlighting the need for other two policies as well - stronger activation of structural measures and fiscal policy."

According to Vasle, Slovenia is in a situation similar to other euro countries as well as others. Growth is cooling down due to global factors - slowing international trade; however, it is still positive.

The governor said that Slovenia's service sector, which depends on the home environment, was doing very well, which resulted in a stable labour market, with the highest figures since the country's independence.

Asked about whether Slovenia was ready for another financial crisis, Vasle said that the current situation was completely different from the one in 2007 and 2008, pointing out that the processing industry had changed and become more efficient and focussed on development and foreign markets.

He added that people saving up and being moderate in spending have also contributed to this stability, with budget conditions improving as well.

"However, during the financial crisis, the debt increased severely. Slovenia has a three times higher debt than it had before the last crisis arose, which could be one of the factors that would make it harder to respond to a potential further economic deterioration in the next few years," said Vasle.

He added that IMF representatives delivered a positive assessment of Slovenia's fiscal policy and acknowledged that public debt had been significantly reduced in the recent years.

Meanwhile, Dragonja pointed out that the government was tackling a complex issue of some EUR 30 billion debt.

On the sidelines of the Washington meetings, the state secretary met representatives of credit ratings agencies, investment funds and investment banks to discuss reducing interest on the national debt and easing the squeeze on the budget.

"There were 20 talks and the outlook looks promising despite somewhat lowered growth projections. Slovenia is in a good economic and macroeconomic condition; however, it does have an excessive public debt, which is why it needs to maintain strict discipline when it comes to banks and budget," said Dragonja.

"The budgets need to be balanced, surplus needs to be generated and reserves for controlling economic cycles should be created."

Asked about whether the IMF figures on Slovenia's growth were the same as Slovenian ones, Dragonja replied that the figures were very similar, although Slovenia's projection for this year was a bit higher than the IMF outlook which stood at 2.9%.

There were not huge discrepancies and Slovenia is taking into account the IMF suggestions on planning the country's economic policy, said Dragonja, adding that Slovenia was part of the EU economic space and as such could not significantly diverge from its outlook.

Both the governor and state secretary said that the current situation included extremely low interest rates, which benefited debtors but put pressure on the financial sector, with the meeting discussing the future challenges of this issue.

STA, 12 September 2019 - The Institute of Macroeconomic Analysis and Development (IMAD) has downgraded its projection of Slovenia's gross domestic product (GDP) growth for this year to 2.8%, down 0.6 percentage points compared to its spring forecast, which will seriously affect government budget planning.

 The government's macroeconomic think tank has also downgraded by 0.1 points its GDP growth forecasts for 2020 and 2021, to 3% and 2.7%, respectively.

IMAD said the downgrade was the result of a slowdown in Slovenia's major trading partners, in particular Germany, which will affect exports and capital spending; consumer spending is expected to remain robust.

"Confidence indicators in the international environment have been deteriorating since the start of last year, which has had a negative impact on export orders and demand. The prospects until the end of the year are worse than we expected in spring," IMAD director Maja Bednaš said.

Finance Minister Andrej Bertoncelj noted at a press conference after the government session that the government had prepared the supplementary budget for 2019 based on the spring forecast, which had projected the economy growing at 3.4%.

The minister added that the new projection had been downgraded based on the second quarter of the year, when there had been major changes in inventories. The situation is expected to improve somewhat in the third and fourth quarters.

"Let me be clear and say that growth of either 2.8% or 3% is very solid economic growth, which is still more than double of the eurozone average," Bertoncelj said.

The minister stressed that the downgrade should be followed by appropriate measures. The government has already frozen the budget, with all major expenditures by ministries needing to get the stamp of approval from the Finance Ministry.

"I have called on the ministers to save money and cancel non-essential measures," said the minister, who believes that a part of the drop in the expected revenue could be compensated by austerity measures.

He added that the ministries had been saving money since last September. "I'm not talking about obligations under the law, but about non-essential measures. One needs to act responsibly these days and limit expenditure in this segment."

For 2020, the minister will reduce the amount of planned expenditure by EUR 100 million to EUR 10.35 billion. "The 2020 and 2021 budgets will be drafted in accordance with the fiscal rule," Bertoncelj added.

"I don't want to sound pessimistic. We have solid economic growth, we follow IMAD forecasts, but I expect that a correction might take place, and if necessary, we will adjust immediately."

The minister explained that the expected EUR 100 million cut would be made in a linear fashion, with each department losing around 1% of the funds.

Bertoncelj noted that the state budget returned to the black in August to record a surplus. A surplus of 0.8% of GDP is planned for next year, and a 1.2% surplus in 2021.

"It's important that we maintain the trend of budget surplus, further reduce general government debt and go for structural balance in these three years," he said, adding that this was also important for credit ratings.

Prime Minister Marjan Šarec said the IMAD downgrade had been expected and would require reducing budget expenditure, which the government will do to comply with the constitutional balanced-budget rule.

And although he said each department would have to sacrifice one percent of its budget, he indicated that generous social benefits would have to be restructured to make the budget more sustainable.

"Denmark has a high standard of welfare but our social transfers are 25% higher. We're absolutely going to have to change some things to survive in the long term," he told Radio Slovenija in an interview.

In his first reaction to the announcement, Economy Minister Zdravko Počivalšek stressed that growth remained robust and was above the eurozone average.

He said he remained an optimist, since Slovenian companies are less indebted than they had been before the previous crisis, they are also more innovative and export-oriented.

STA, 13 August 2019 - Foreign direct investments (FDI) in Slovenia more than doubled in the first half of 2019 to reach EUR 614.4 million. The figure is considerably higher than the EUR 242 million recorded in the same period of 2018, according to central bank data. What is more, FDI nearly doubled between June 2018 and June 2019 year-on-year.

Banka Slovenije's monthly report for June shows that FDI reached EUR 1.4 billion between June 2018 and June 2019, which is almost double the EUR 721.1 million recorded between June 2017 and 2018.

Last year, FDI in total reached EUR 1.2 billion, with the central bank pointing out that several large takeovers had taken place during this period, including the one of insurer Adriatic Slovenica by Italian Generali group, of home appliances maker Gorenje by Chinese Hisense and of poultry producer Perutnina Ptuj by Ukrainian MHP.

Slovenia's FDI abroad, on the other hand, was far lower. In the first half of 2019, reached EUR 52.6 million, a significant drop over the EUR 159.9 million in the same period of last year.

Between June 2018 and June 2019 Slovenia's FDI reached EUR 117.8 million, down from EUR 130.3 million invested between June 2017 and June 2018. Last year, Slovenia's FDI reached a total of EUR 63.3 million.

STA, 31 May 2019 - Slovenia's economy continues strong with the latest data showing that the GDP expanded at an annual rate of 3.2% in real terms in the first quarter of the year and by as much as 3.7% when adjusted for season and working days.

Although growth in real terms slowed down from the 4.1% recorded in the previous quarter, seasonally adjusted rate of growth ran slightly above the 3.6% recorded in the final quarter of 2018.

Seasonally adjusted quarter-on-quarter growth was 0.8%, data from the Statistics Office (SURS) show.

Contrary to expectations by analysts, the slowdown was not provoked by external demand as the growth of exports gathered pace compared to the previous two quarters, but rather by a slowdown in domestic expenditure.

Domestic expenditure grew by 1.8% year-on-year in the first quarter, the lowest rate of growth in at least three years, with the biggest impact coming from a 1.3% decline in gross capital formation, SURS official Romana Korenič told reporters in Ljubljana on Friday.

Changes in inventories had a markedly negative impact on GDP growth, as much as 2.1 percentage points.

Gross fixed capital formation increased by 9.3%, which is on a par with the previous quarters. Construction investment expanded by as much as 18.1% but investment in machinery and equipment slowed down to 4%.

Businesses reduced inventories by 2.1%, the reason for which is not clear yet. Korenič said a potential reason could be a drop in orders, although business sentiment data or export growth do not suggest that.

Domestic expenditure was thus fuelled only by final consumption expenditure, which grew by 2.9%, a somewhat higher rate than in the previous three quarters.

Driven mainly by an increase in public sector pay at the beginning of the year, government final consumption rose by 3.6%, whereas household consumption increased by 2.6%, however Korenič said that the latter contributed more to the final consumption growth than government spending.

The statisticians noted a slowdown in household expenditure for durable goods, in particular cars. However, daily purchases of goods such as food, beverages, fuel and some types of services increased.

After a somewhat lower growth of exports in the third and fourth quarters of last year (5.4% and 6.8%), exports expanded by 7.6% year-on-year in the first quarter.

Imports increased at a slower pace (6.4%), which resulted in high external trade surplus. This time it contributed 1.6 percentage points to GDP growth.

Employment keeps increasing but with signs of a moderation. The number of people in work in the first quarter rose by 2.6% year-on-year to 1,026,547.

Half of the new jobs were created in manufacturing and construction, with livelier hiring also observed in transport, trade, and professional, scientific and technical activities.

Running at 3.2%, growth in real terms was the slowest since the final quarter of 2016 when it ran at 3%.

STA, 21 May 219 - The Organisation for Economic Co-operation and Development (OECD) has downgraded its forecast for Slovenia's gross domestic product (GDP) growth for this year by 0.2 percentage points to 3.4%, while upgrading the 2020 forecast by 0.4 points to 3.1%.

In the forecast published on Tuesday, the OECD said that Slovenia's economic growth remained strong, being powered by the solid domestic consumption.

Domestic consumption is supported by the improving situation on the labour market, growth of wages in real terms and a high consumer confidence rate.

The EU structural funds, the companies' needs for additional production capacities and favourable financing conditions are maintaining a strong investment growth, while exports are slowing down due to lower demand.

The OECD expects that private consumption will increase this year by 3% (3.1% in 2020), state investments by 2.2% (1.9% in 2020), companies' investments in fixed assets by 8% (7.2% in 2020), exports by 5.8% (7% in 2020) and imports by 5.2% (5.9% in 2020).

Employment continues to grow, with hiring of foreign workforce also being on the increase, the OECD said, adding that the shortage of workforce was nevertheless the highest in the last ten years.

The Paris-based organisation noted that Slovenia's fiscal policy for this year was expansive, while that for 2020 was neutral, adding that Slovenia should make its fiscal policy stricter to keep inflation pressure in check and ensure fiscal sustainability.

Measures such as restricting early retirement and facilitating privatisation would contribute to mobilising labour resources which are not fully utilised at the moment, and make labour force available to fast-growing industries, the OECD added.

It said it expected economic growth in Slovenia to slow down in 2019-2020, adding that the higher domestic demand and growth of investments would be covered with higher imports.

Given the weaker demand from abroad and higher labour costs, the growth of exports will slow down, while the employment rate will drop below the natural rate, which is expected to facilitate wage growth and increase inflation.

Slovenia's economic growth could be higher than projected if households save less and increase consumption, or lower than projected if companies fail to increase their production capacities to the expected level.

This could result in a drop in their competitiveness and lower exports, the OECD said, adding that economic growth in Slovenia could also be negatively affected by a possible strong real estate market correction.

STA, 8 May 2019 - The Slovenian economy as a whole significantly improved its performance last year, with total net profit of companies increasing by 16% and total revenues by 9%, according to the Agency for Public Legal Records (AJPES).

The total net profit posted by Slovenian companies surpassed the total loss for the fifth year in a row in 2018, standing at EUR 4.2 billion, up 16% year-on-year.

The 66,749 companies which submitted their business results for last year to AJPES meanwhile increased their combined revenue by 9% to EUR 100.8 billion.

Revenues generated on the foreign markets amounted to EUR 40.7 billion, which is 10% more than in 2017.

Slovenian companies also hired new employees at a facilitated pace last year, with the number of employed persons measured by hours worked increasing by 29,517 compared to 2017 to 503,326.

Employees received an average wage of EUR 1,652 gross last year, or EUR 65 gross more than in 2017. Net added value per employee was up by 2% to EUR 44,415.

AJPES will present a more detailed analysis of annual reports of Slovenian companies at a press conference next week.

STA, 19 April 2019 - Tourism contributed EUR 5.7bn or 12.3% to the Slovenian gross domestic product (GDP) in 2018, according to a report by the World Travel and Tourism Council (WTTC). The sector employed 110,700 people or 12.8% of total employment.

The annual contribution of tourism to the Slovenian GDP increased by 6% compared to 2017, the Slovenian Tourist Board said.

Related: 2018 Saw 8% Rise in Tourists, 10% in Nights, Strongest Growth from Abroad

In Europe, tourism contributed 9.7% to the GDP last year, an increase of 3.1 percentage points over 2017. Some 36.7 million people or 9.7% of all working Europeans were employed in the sector.

On a global scale, the tourism and travel sector directly and indirectly contributed EUR 7.825bn or 10.4% to the global GDP. The sector employed some 319 million people.

This year, tourism's contribution to the global GDP is set to increase by an additional 3.6%. The WTTC estimates that the total number of people employed in the sector globally will increase by 2.9%.

All our stories on travel and tourism in Slovenia are here