Economic growth in Slovenia has been resilient amid multiple shocks including the devastating floods of 2023 and the broader economic impact of Russia’s war of aggression against Ukraine. However, disruptions continue to pose risks to growth and highlight the need for structural reforms to durably strengthen economic development, according to the latest OECD Economic Survey of Slovenia.
The OECD projects GDP growth to pick up from 1.6% in 2023 to 2.3% in 2024, reaching 2.7% in 2025 as private consumption rebounds and inflation eases. Inflation is projected to decline from 7.2% in 2023 to 3.3% in 2024, then to rise slightly to 3.5% in 2025. The unemployment rate is expected to remain stable at 3.7% in 2024 and 3.5% in 2025.
Slovenia’s labour market continues to be tight. Minimum wage increases have kept real wages growing faster than labour productivity. This strong wage growth, together with untargeted fiscal support during the energy crisis, has added to inflationary pressures.
“Slovenia’s economy has grown more strongly over the past five years than the economy across OECD countries and the euro area. Slovenia is well on track to achieve income convergence with higher-income countries,” OECD Secretary-General Mathias Cormann said, presenting the Survey in Ljubljana alongside Slovenia’s Prime Minister Robert Golob. “To continue boosting economic progress and resilience, accelerating fiscal consolidation would help lower inflation and rebuild fiscal space. In this context, increasing the effective retirement age would help address long-term spending pressures. Promoting housing supply, including through better land-use planning, to improve housing affordability should also be a key policy priority for Slovenia.”
Housing affordability concerns are growing as the housing sector in Slovenia is strained by high demand and insufficient supply. Comprehensive reforms are required to streamline land use and permitting procedures, enhance the provision of social housing and promote competition in the mortgage market. The increase in the costs of living over the past two to three years has highlighted the necessity and urgency of transitioning towards energy-efficient housing, through a combination of regulation and effective support measures.
Female employment rates are high in Slovenia, though they could be boosted further through reforms that remove disincentives for second earners to participate in the labour market. Gender wage gaps are similarly relatively small; still, affordable high-quality childcare, flexible work arrangements and policies addressing gender stereotypes in educational and career choices could help reduce them further.
Further efforts are also needed to achieve net-zero greenhouse gas emissions by 2050, particularly in the agriculture, energy and transport sectors. Per-capita greenhouse gas emissions are as high as 35 years ago. A greater harmonisation of carbon prices, notably by reducing tax incentives for the use of fossil fuels, will be key for achieving climate targets. This should be complemented by a faster deployment of renewables to accelerate the energy transition and ensure energy security.
Source: OECD
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