Country Report Slovenia May 2009

Outlook for 2009-10

• The centre-left coalition government, elected in September 2008, is likely to remain in office throughout the forecast period.
• Animosity among the coalition partners, headed by the Social Democrats (SD), may cause friction and occasional threats to stability.
• Relations between Slovenia and Croatia are likely to remain strained over their territorial dispute, which the EU is trying to resolve through mediation.
• In 2009 the government will focus on countering the effects of the global financial and economic crisis, which will further slow any progress on economic and social reforms.
• The government will try to limit the impact of the economic slowdown by increasing public expenditure. We forecast the budget deficit to exceed EU-mandated limits in 2009, before falling to around these limits in 2010.
• We have revised down our growth forecast, and now forecast a contraction in real GDP of 4%, in 2009. We expect a modest rebound, of 0.5%, in 2010.

Monthly review

• The interior minister, Katarina Kresal, has survived a no-confidence vote over her move to grant residency to non-citizens erased from official records.
• The prime minister, Borut Pahor, has been criticised by some members of his party, the SD, for choosing a non-party member to lead the SD's list in the European Parliament election in June.
• Slovenia and Croatia have said that they will try to resolve their border dispute through quiet diplomacy, after they failed to agree on a formal mechanism for resolving the dispute.
• The government is drafting a third anti-crisis package, with a view to boosting employment and companies with liquidity problems during the downturn.
• The budget deficit in February 2009 was the largest for a single month in more than two years, following a decline in indirect tax receipts, owing to sluggish business activity and consumer demand.
• Industrial output contracted by 19.9% year on year in January-February as external and domestic demand continued to weaken.
• The trade deficit declined markedly as the drop in imports, down by 30.2% year on year in January-February, outpaced the 25.3% fall in exports.

Source: Country Report

This report covers the following industry codes:
SIC Code: 48;49
NAICS Code: 517;22