London, 30 January (STA) - The European Bank for Reconstruction and Development (EBRD) has downgraded its forecast of Slovenia's economic growth for this year from 2.1% to 1.7%, and estimated that the country's economy grew at 1% last year.
The bank says that growth will be hampered by the banking sector's problems (problems with financing, bad loans) and the government's shrinking ability to encourage growth through public finances.
The bank whose region of operations extends from Central Europe to Central Asia further cites the country's slow implementation of structural reform and slow changes in corporate governance as obstacles to growth.
The London-based EBRD says that austerity measures prevent increasing incentives for business on the part of the Slovenian government and hamper a rise in domestic demand.
Slovenia belongs to the group of Central and East European countries, where Lithuania is the only other country to have its forecast for 2011 downgraded (from 4% to 2.5%). The other countries in the group saw their forecasts upgraded.
The entire group, which also includes Croatia, Hungary, Latvia, Poland and Slovakia, is forecast to post a 3.2% growth, or 0.2 percentage points more than anticipated in October.
The EBRD's January forecast expects the entire region covered by the bank to post an average 4.2% growth in 2011, up 0.1 percentage point over the October forecast.