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D&B Remains Concerned about Weak Domestic Demand in Slovenia

Ljubljana, 07 February (STA) - Rating firm Dun&Bradstreet (D&B) kept Slovenia's rating unchanged at DB2c in February, saying however that the country's sovereign credit rating remains vulnerable despite the government's attempts to reform public finances. According to D&B report, domestic demand remains weak amidst increasing unemployment and tight credit.

The report states lack of payment discipline as especially troublesome for small and medium-sized companies. Moreover, consumer confidence remains low in Slovenia as well.

Pointing to the construction sector, the rating firm says that the insolvency of construction giant SCT additionally weakened the sector, increasing business risk for companies that operate as providers or subcontractors for big constructors.

What is more, the construction sector is expected to weaken further, the report says, stating that the Chamber of Commerce and Industry had forecast a 7% drop for the sector in 2011. The value of new construction works declined 18% between October 2009 and October 2010.

Touching on Slovenia's December 2010 rating by Standard & Poor's agency, the report points out that S&P downgraded Slovenia's rating outlook from stable to negative, which indicates an increased risk for downgrade in the next years if Slovenia fails to consolidate its finances.

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