201
Slovenia Economic growth is projected to remain at around 3% until 2021. Private consumption will continue to be the main driver of growth, sustained by higher wages and solid employment gains. Uncertainty about the external environment will slow the pace of new business investment. Improvements in export performance will slow with rising labour unit costs. The import content of exports is rising, as foreign demand for goods with higher domestic value added weakens. Domestic demand is increasingly satisfied through imports, owing to tightening capacity constraints. Fiscal policy will remain supportive of growth in the coming two years, driven by higher public sector wages and social transfers. As favourable borrowing conditions persist, growing domestic inflationary pressures call for a moderation in the fiscal stimulus. Measures to restrict pathways to early retirement would mobilise older workers, while accelerating privatisations and decentralising wage bargaining, would contribute to improve labour allocation, and alleviate labour shortages and wage pressures. Domestic inflationary pressures are building up Growth has moderated despite strong private consumption. Weaker foreign demand for components from the car, electrical machinery and metal products industries has been reflected in lower export growth. Growing uncertainty about future export orders contributed to lower growth in business investment. At the same time, domestic demand is increasingly satisfied through imports as capacity constraints tighten. The structure of exports is also changing towards manufactured goods with higher import content.
Slovenia Higher wage growth¹ is spreading to all sectors
Higher wages are feeding into inflation
Y-o-y % changes 9 All activities
8
Y-o-y % changes 5
Headline inflation Core inflation²
Manufacturing sector
4
7 3
6 5
2
4 1
3 2
0
1 -1
0 -1
2010
2012
2014
2016
2018
0
0
2010
2012
2014
2016
2018
-2
1. Hourly earnings. Year on year percentage change, three-month moving average. 2. Core inflation excludes energy and food. Source: OECD Main Economic Indicators database. StatLink 2 https://doi.org/10.1787/888934045905
OECD ECONOMIC OUTLOOK, VOLUME 2019 ISSUE 2: PRELIMINARY VERSION © OECD 2019