Country Report Slovenia December 2008

Outlook for 2009-10

• The Social Democrats (SD) won the election that was held in September 2008, subsequently forming a coalition with Zares, the Liberal Democracy of Slovenia (LDS) and the Democratic Party of Slovenian Pensioners (DeSUS).
• The government is likely to remain in office throughout the forecast period, although residual animosity between the centre-left parties could cause occasional instability, as could clashes between these parties and DeSUS.
• In 2009 the government will focus on measures to counter the effects of the global financial and economic crisis. Even once the economy begins to recover, the Economist Intelligence Unit does not expect any thoroughgoing social or economic reforms to be implemented.
• The budget deficit is likely to stay below EU-mandated limits in 2009-10, although the expected economic slowdown will lead to a substantial increase in welfare expenditure.
• We forecast a moderation in average annual real GDP growth, to 2% in 2009, from an estimated 4.2% in 2008, as the growth of domestic and foreign demand slows markedly. In 2010 GDP growth will pick up to 3.2%.
• We forecast that average inflation will fall in 2009-10, from an estimated peak of 5.9% in 2008, although loose monetary policy and high wage settlements could limit the extent of this fall.

Monthly review

• On November 6th The SD signed a coalition agreement with Zares, the LDS and DeSUS. The agreement took several weeks to reach, as the parties wrangled over the composition of the cabinet.
• In November parliament passed amendments to the acts on public finances and banking to counter the effects of the international financial crisis.
• The government will give 12bn (US$15bn) in guarantees for bank loans, as well as temporary unlimited guarantees for retail bank deposits and savings.
• In the third quarter of 2008 industrial output contracted by 1.6% year on year. This was the sixth consecutive quarterly slowdown, and the worst result since the second quarter of 1999.
• The balance of economic indicators suggests that third-quarter real GDP growth slowed substantially compared with a rate of 5.5% year on year in the second quarter.
• Forward-looking economic and survey data hint at further deterioration in the coming quarters. Manufacturing orders are contracting sharply, and in November a measure of business sentiment plunged to an all-time low.

Source: Country Report

This report covers the following industry codes:
SIC Code: 47;49;37;60;2834;80;15;65;10;13;82;70
NAICS Code: 48;22;336;52;3254;62;23;53;212;211;61;72