Business News

Economist: Reforms Key to Recovery

Ljubljana, 05 January (STA) - Bostjan Vasle, the boss of the Institute of Macroeconomic Analysis and Development (IMAD), the government's macroeconomic think-tank, has joined the growing ranks of economists urging the government and business to speed up reform in order to ensure sustainable economic growth.

"Slovenia cannot perennially rely on exports to Germany and hope that the German economic train will not run out of steam...For Slovenia's small and open economy the only way forward is to seriously undertake structural reforms we've been talking about for a decade," Vasle told Wednesday's edition of business daily Finance.

Vasle rejected the notion that Slovenia was so reliant on Germany it could not do much by itself. "Even though exports are propelling growth, they could play an even bigger role considering that the crisis has exposed numerous weaknesses in our economy."

He pointed to the reliance on only a handful of key markets and an inadequate technological structure of exports. "IMAD has been saying for years that technological composition is the decisive factor separating more and less successful economies."

Reforms need to include the labour market and higher education; the administrative environment is still not conducive to business and international comparisons show that taxes on highly skilled staff are higher than in countries Slovenia competes with.

But state measures need to be coupled with reforms by business. "The prevailing logic of every business association is that it can solve economic problems by drawing up 15 demands on what the government should do for the economy, but they don't ask themselves how companies are managed," he noted.

"Sometimes businesses should ask themselves whether they have raised production, which new technologies they have introduced, which new products and services they have offered to international markets," Vasle told Finance.

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