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OECD Forecasts 7.9% Fall in Slovenia's GDP in 2009

Paris, 19 November (STA) - The Organisation for Economic Co-operation and Development (OECD) forecast in its economic report on Thursday a 7.9% drop in Slovenia's GDP in 2009, while projecting a moderate 2.7% growth rate fuelled by exports in 2010, rising to 3% by 2011.

"Although Slovenia moved out of recession already in the second quarter of 2009, the precipitous decline in the previous two quarters was severe enough to give a year-on-year output fall in 2009 of close to 8%," the OECD said in the report.

The report expects Slovenia's inflation to remain moderate due to the negative output gap and high unemployment, with projections of 0.7% for 2009, 1.1% for 2010 and 2.7% for 2011.

A new pension reform should bolster fiscal consolidation, while labour market reforms that should help speed up employment recovery, the report also says.

Private consumption is projected to decrease by 1.7% this year, while the decline should grind to a halt in 2010 and then experience a rebound in 2011.

Final domestic demand is meanwhile thought to see a 7.4% drop, while regaining ground in 2010 and adding 3.1% in 2011.

OECD Economic Outlook is published twice a year and analyses the major trends and the economic policies required to foster high and sustainable growth in member and accession countries.

Slovenia is in talks with the OECD on finalising its membership after being invited to join the club of the world's most developed countries in May 2007.

The OECD's forecast for the contraction in Slovenia this year is slightly higher than that predicted by the Institute for Economic Analyses and Development (IMAD) and the European Commission, which have predicted a drop of 7.3% and 7.4% in GDP respectively.

However, the OECD has also predicted a faster recovery for the country. IMAD forecast Slovenia's economy to grow by 1% next year, whereas the Commission forecast 1.3% growth.

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