Slovenia Information Technology Report Q3 20007

Market Overview

The Slovenian IT market will be supported by an economy which is maintaining its momentum in 2007, lifted by general recovery in the eurozone of which it is now a member. Strong domestic investment growth is encouraging spending on improving IT infrastructure and suggests a promising context for Slovenian IT market development over the next period. While Slovenia is one of the more mature ICT markets among the recent EU entrants, there is still plenty of room for growth. The IT market is expected to grow at a CAGR of 8% over the forecast period from 2006-2011, with euro adoption in 2007 also driving significant IT spending. Tax cuts should underpin further investment in IT to support future expansion for Slovenian companies within the EU market and beyond. Household expenditure is also quite robust currently and being reinforced by strong employment growth.

With Slovenia becoming a member of the eurozone on January 1 2007, the country's state of information development completing a 10-year period of economic and structural reform, the direct and indirect effects of EU membership will continue to drive IT spending for some time. As discussed in this quarterly update, uneven development in areas from e-government to education and internet penetration represent potential opportunities for vendors going forward. Slovenia is behind the EU average in a number of areas such as computers in the workplace, but ahead in others. Increasing broadband and internet penetration should also drive sales going forward.

IT spending is expected by BMI to increase from US$906mn in 2005 to around US$1.3bn in 2010, with services (25% of spending) and software (18%) growing at a faster rate than hardware (57%). One area for growth is likely to be in the relatively underdeveloped north-eastern area of Podravje, which has previously been associated with heavy industry, but is now the focus of government redevelopment efforts, and also benefits from its proximity to Austria. From a sector perspective, manufacturing has been the key driver of growth, with particularly strong performance in the production of electrical and optical equipment and chemicals.