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Slovenia GDP growth is projected to slow to 1.5% in 2023, reflecting weak domestic and external demand. The labour market is expected to remain tight, fuelling stronger wage growth and contributing to inflationary pressures. Growth will strengthen to 2.6% in 2024 as inflationary pressures gradually recede. Fiscal policy will remain expansionary in 2023, before tightening in 2024. This reflects government measures to mitigate the effects of high energy prices on households, as well as higher public investment and public sector wages. Fiscal support should be financed by spending cuts as the current expansionary fiscal stance risks intensifying inflationary pressures. Structural reforms are needed to safeguard fiscal sustainability and raise potential growth, including measures to improve the labour force participation of older workers and extend working lives, as well as a lower labour tax burden, financed by higher property and environmental taxation. Economic activity remains resilient Economic activity expanded more than expected in the last quarter of 2022, driven by private consumption and government spending. The expansion continued in the first quarter of 2023, with GDP up by 0.6% quarter-on-quarter. The labour market remains tight with an unemployment rate of 3.2% in March. This is reflected in strong wage growth. In the fourth quarter of 2022, labour costs per hour worked grew by 11.9% year-on-year. Minimum wages rose by 12% in January 2023, while negotiated public sector wages increased by 8.5% between October 2022 and April 2023. Wage pressures have contributed to persistently high core inflation of 7.6% in April. Headline inflation peaked at 11.7% in July and slowly declined to 9.2% in April, reflecting falling energy prices.
Slovenia
1. The job vacancy rate measures the proportion of total posts that are vacant, expressed as the ratio of the number of job vacancies to the number of occupied posts plus the number of job vacancies. 2. Core inflation refers to the overall index excluding energy, food, alcohol and tobacco. Source: Statistical Office of Slovenia; and Eurostat. StatLink 2 https://stat.link/qukhvo
OECD ECONOMIC OUTLOOK, VOLUME 2023 ISSUE 1: PRELIMINARY VERSION © OECD 2023