Slovenia flag Slovenia: Economic and Political Overview

The economic context of Slovenia

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Slovenia has been an open market since its successful economic transition in the 2000s. As a member of the European Union since May 2004 and of the Eurozone since 2007, Slovenia is an advanced, independent, and stable country. After contracting due to the COVID-19 pandemic, Slovenia’s GDP rebounded in 2021 and continued its positive trend in 2022, when growth was estimated at 5.7% according to the IMF (5.1% as per the EU Commission figures), as private consumption continued to increase and investments proved robust. On the other hand, the trade balance in goods turned negative, with an export-import ratio of 93.2% (Statistics Slovenia). Global economic uncertainty and the tightening of financial conditions should hamper growth in 2023, with the IMF forecasting a GDP increase of 1.7%, while the EU Commission has a more conservative outlook (+1%). Investment is forecast to continue growing, sustained by EU RRF-supported public investments. For 2024, the IMF projects growth at 3%.

Strong revenue performance and some under-execution in spending helped reduce the budget deficit from 6% of GDP in 2021 to 3.9% last year. Around 2% of GDP has been budgeted in emergency measures for 2023 (mostly related to the rise in energy prices), with the government deficit projected at 3.2%. Conversely, the country’s debt-to-GDP ratio went down to 69.5% in 2022 (from 74.4% one year earlier) and is expected to follow a downward trend over the forecast horizon (at 66.7% this year and 63.6% in 2024 - IMF) supported by GDP growth. Sound debt management and long average maturities (10 years) significantly reduce financing risks (Fitch Ratings). Fuelled by the rise in energy prices and the consequent spill-over on industrial goods, food and services, inflation spiked in 2022 reaching 8.9%. With global energy prices easing and growth remaining weak, headline inflation is projected to decrease to 5.1% in 2023 and 3.3% the following year, closer to the European Central Bank’s target.

Unemployment has been on a declining trend in recent years: it was estimated at 4.3% in 2022 and should remain stable in the upcoming future. The EU Commission expects wage growth to be robust in 2023, partly compensating for the increased cost of living. According to the latest data from Eurostat, 13.2% of the population is at risk of poverty or social exclusion, the second-lowest ratio in the EU. Nevertheless, poverty amongst the senior population, consisting of mostly women and marginalized minorities, is an area of severe concern; to address this, the government deployed a specific strategy for elder people. Overall, the IMF estimated the country’s GDP per capita (PPP) at USD 49,968 in 2022.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 60.1168.3973.8778.8183.11
GDP (Constant Prices, Annual % Change) 2.52.02.22.62.8
GDP per Capita (USD) 28,52732,35034,91437,26939,326
General Government Balance (in % of GDP) -3.9-3.9-2.7-2.2-1.8
General Government Gross Debt (in % of GDP) 72.668.566.564.763.4
Inflation Rate (%) n/a7.44.23.12.4
Unemployment Rate (% of the Labour Force) 4.03.63.83.94.0
Current Account (billions USD) -0.613.042.832.492.39
Current Account (in % of GDP) -1.04.43.83.22.9

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Slovenia has a skilled and productive labour force of around 1 million people out of its 2.1 million population. The agricultural sector is declining and accounts for only 1.7% of the GDP, employing around 4% of the population (World Bank, latest data available). The country counts 68,331 agricultural holdings, the total utilized agricultural area equates to 30.6% of the total area, with 5.5% of agricultural holdings dedicated to organic production. Forestry is a key economic factor, with 66% of the land area forested and an annual production value of EUR 250 million to the economy. According to the latest figures by the Slovenian Statistical Office, the value of the agricultural output in 2022 was estimated at EUR 1,670 million, showing a year-on-year increase of 1% in volume terms and 20% in price terms. The value of crop production was 15% higher than in 2021: although production was 1% lower, prices increased by 16%.

The industrial sector represents 28.5% of GDP and one-third of employment (34%). Historically, the dominant industries in Slovenia have been the forestry, textile, and metallurgical industries. Since the 1980s, the mechanical industries (automobile, tool machines) and the high-value-added industries (electronics, pharmacy, and chemicals) have been greatly developed. The World Bank estimates the manufacturing sector to contribute 20% of GDP. Slovenia's industrial production expanded by 1.7% in 2022, following a 10.2% rise in the previous year (Slovenian Statistical Office).

The tertiary remains the most significant sector in the Slovenian economy. It represents 57.7% of the GDP and employs 62% of the total workforce, and has shown a strong growth pattern during the last ten years, especially in the fields of information and communications technology (ITC), financial, commercial services, and retail business. The tourism sector is very dynamic and has been undergoing a period of strong development in recent years. After suffering due to the COVID-19 pandemic, the sector recovered in 2022 when Slovenia was visited by around 5.9 million tourists, who generated almost 15.6 million overnight stays, 27.5% more than the previous year, of which about 65% were from foreign tourists. According to the latest figures from the European Banking Federation, the Slovenian banking sector comprises 11 commercial banks, three savings banks and two branches of foreign banks.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.1 30.0 65.9
Value Added (in % of GDP) 1.7 29.0 57.8
Value Added (Annual % Change) 2.2 2.1 8.1

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
68,3/100
World Rank:
48
Regional Rank:
28

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
6.75/10
World Rank:
34/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

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Latest Update: December 2023

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