London, 26 September (STA) - The European Bank for Reconstruction and Development (EBRD) has downgraded its economic growth forecast for Slovenia for this year to 1.5% from 2.3%, in line with a recent forecast by the Slovenian central bank. It has meanwhile kept its forecast for 2025 unchanged at 2.6%.
In its latest report on economic outlook for the region it covers, the EBRD notes that economic growth in Slovenia slowed to 1.4% in the first half of 2024, after standing at 2.1% in 2023.
This is the result of a drop in investments, including inventories, and in the export of services, the bank says, noting that the biggest slump was observed in construction, services and manufacturing.
On the other hand, the growth of government spending accelerated to 10%, the report published on Thursday adds.
After a deep decline in 2023, the volume of industrial production fell by another 3.6 percent in the first half of this year, which, according to the EBRD, reflects weaker demand for Slovenian goods from abroad.
The bank further notes that additional growth will be recorded in 2024 in the exports of drugs to Switzerland, which account 28% of Slovenia's total exports and act as a buffer against weak trade with Germany and Italy.
Inflation in Slovenia slowed to 0.9% by August, and the tight labour market poses an increased risk for wage growth in the medium term.
Although major expenditure is planned for post-flood reconstruction, higher taxes and lower-than-planned budget spending allowed for a 50% cut in the deficit in early 2024 compared to the same period last year, the EBRD says.
The 2024 growth forecast of 1.5% anticipates a recovery in investments, while the expected improvement of the situation in the eurozone, stronger investments and growth in wages in real terms are expected to accelerate the pace to 2.6% next year, the report concludes.
