Business News

EU Commission Forecasts Growth of 1.9%, Deficit of 5.8% for Slovenia (II)

Brussels, 13 May (STA) - The European Commission anticipates Slovenia's economy to grow by 1.9% this year and 2.5% next year in economic forecasts issued on Friday. The country's budget deficit is meanwhile expected to stand at 5.8% this year.

The Commission's growth forecasts for Slovenia are above the average growth for the eurozone and the EU as a whole for the current and next year.

The Slovenian Finance Ministry pointed out that the growth forecasts out of Brussels on Friday were 0.1 points and 0.3 points higher than those sent by Slovenia to the European Commission in its Stability Programme in April.

The figures are, however, little changed from that envisaged by the Commission last autumn.

The Commission said Slovenia's economy was continuing a slow recovery based on exports. It said quicker growth was being hindered by a drop in its competitiveness during the crisis and high reliance on exports to countries in the Western Balkans, whose economies were still fragile.

The news of a solid growth forecast came against a backdrop of a downgraded forecast for the budget deficit for Slovenia.

The Commission anticipates that Slovenia's budget deficit will also be above average, at 5.8% this year and 5% next year. This is 0.3 points and 1.1 points higher than that in Slovenia's Stability Programme.

The Finance Ministry said that the Commission's figure for 2012 was based on the premise that Slovenia would not take additional economic measures to curb the deficit. But it said it was planning to reduce the budget deficit with greater effectiveness in collecting taxes and austerity in the public sector and welfare spending.

Slovenia is currently facing EU action for exceeding a budget deficit of 3% and has promised to return under this number by 2013.

Meanwhile, the Commission pointed out that Slovenia's public debt will continue to grow - to 42.8% of GDP this year and 46% of GDP next year - although it will remain well below the 60% threshold imposed by eurozone's Stability and Growth pact.

At 2.6%, inflation in Slovenia will be on par with the eurozone this year. For next year the Commission forecasts inflation of 2.1% in Slovenia, which is expected to be slightly higher than in the eurozone and the EU.

According to the forecasts, Slovenia's unemployment rate is expected to peak at 8.2% this year (up from 7.3% last year), before gradually retreating to 8% in 2012. This is still well below the average in the eurozone (10% this year and 9.7% in 2012).

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