Despite facing significant obstacles, Slovenia's economy has demonstrated remarkable resilience. The nation has weathered various shocks, including the devastating floods of 2023 and the broader economic ramifications of Russia’s aggression against Ukraine.
However, ongoing disruptions pose risks to growth, highlighting the necessity for structural reforms to ensure sustainable economic development, according to the latest OECD Economic Survey of Slovenia.
The OECD forecasts GDP growth to rise from 1.6% in 2023 to 2.3% in 2024, reaching 2.7% in 2025 as private consumption rebounds and inflation eases. Inflation is projected to decrease from 7.2% in 2023 to 3.3% in 2024, before slightly increasing to 3.5% in 2025. The unemployment rate is expected to remain stable at 3.7% in 2024 and 3.5% in 2025.
Slovenia’s labor market remains tight, with minimum wage increases driving real wages to grow faster than labor productivity. This robust wage growth, along with untargeted fiscal support during the energy crisis, has contributed to inflationary pressures.
“Over the past five years, Slovenia’s economy has outperformed both the OECD average and the euro area. Slovenia is on track to achieve income convergence with higher-income countries,” said OECD Secretary-General Mathias Cormann, presenting the survey in Ljubljana with Prime Minister Robert Golob.
“To further economic progress and resilience, accelerating fiscal consolidation would help reduce inflation and rebuild fiscal space. Increasing the effective retirement age would address long-term spending pressures. Improving housing affordability through better land-use planning should also be a key priority.”
Housing affordability is a growing concern in Slovenia, driven by high demand and limited supply. Comprehensive reforms are needed to streamline land use, enhance social housing provision, and promote competition in the mortgage market.
Rising living costs highlight the urgency of transitioning to energy-efficient housing, requiring a mix of regulation and effective support measures.
Increasing Female Workforce Participation
Female employment rates in Slovenia are high but could be improved by removing disincentives for second earners. Gender wage gaps are relatively small, but affordable childcare, flexible work arrangements, and policies addressing gender stereotypes could further reduce them.
Efforts are also needed to achieve net-zero greenhouse gas emissions by 2050, especially in agriculture, energy, and transport sectors. Per-capita greenhouse gas emissions remain as high as 35 years ago. Harmonizing carbon prices and reducing fossil fuel tax incentives are crucial for meeting climate targets. Accelerating the deployment of renewables is necessary for energy security. A referendum on expanding Slovenia’s nuclear power plant at Krško is planned for later this year, addressing one of the country’s most significant issues in decades.
Boost in Exports
The OECD’s survey aligns with the Vienna Institute for International Economic Studies (wiiw), which predicts slightly higher growth for Slovenia at 2.4% in 2024. This growth is driven by government spending on infrastructure rebuilding post-floods, along with private consumption and investment benefiting from decreasing inflation.
The Vienna Institute also forecasts improved exports and a current account surplus of 3% of GDP, despite imports growing more than exports.
