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ADVERSITIES ECONOMY
Favourable Trends Despite ADVERSITIES
Despite the setbacks resulting from the war in Ukraine and unfavourable global conditions, the Slovenian economy is doing well. Slovenia and Serbia remain good trade partners, while investments are also growing on both sides
According to the Bank of Slovenia’s latest estimate, the Slovenian economy expanded by an estimated one per cent quarter-on-quarter in the first three months of 2022, despite the impact of the Russian invasion of Ukraine on economic activity. The current EBRD forecast for Slovenia’s real GDP growth stands at 3.6% in 2022 and 3.8% in 2023.
According to the country’s central bank, inflation in Slovenia totalled six per cent on an annual comparison basis in March, due to the rise in energy prices that’s being transferred to the cost of other goods.
At the same time, the central bank noted, labour market conditions remain very favourable as employment continues to rise, while the falling availability of local workers is resulting in the employment of foreign workers increasing.
Slovenia has a skilled and productive labour force of around a million people, of a population of 2.08 million. The agricultural sector is declining and equated to only 2.1% of GDP, employing around 4.3% of the population in 2021 (World Bank). Forestry is a key economic factor, with 66% of land area forested and an annual production value to the economy of €250 million. The industrial sector represents 29.4% of GDP and a third of employment (34.1%). Historically, the dominant industries in Slovenia have been the forestry, textiles and metallurgical industries. Tertiary services remain the most significant sector of the Slovenian economy. Representing 56.9% of GDP and employing 61.6% of the total workforce, this sector has shown a strong growth pattern over the last ten years, particularly in the fields of information and communications technology (ITC), financial services, commercial services and retail business. Furthermore, Slovenia’s tourism sector is very dynamic and has been undergoing a period of strong development over recent years. A total of four million tourist arrivals and more than 11 million overnight stays were recorded in Slovenia in 2021, representing 31% more arrivals and 22% more overnight stays than the previous year. Slovenian investments in Serbia total almost a billion euros and Serbian investments in Slovenia stand at €250 million. To put these figures into context, the trade exchange has more than doubled over the last decade and is continuing to grow constantly
Slovenia is highly open to foreign trade, which represents about 146.5% of the country's GDP. Slovenia is integrated within German and Austrian production chains for motor vehicles and electrical and electronic equipment, and is included in Swiss chains for the pharmaceuticals industry, generating more than half of its goods exports from these four sectors. Slovenia’s exports had fallen due to the drop in global demand during the global financial crisis and the economic difficulties faced by EU countries, but since 2011 exports have been increasing continuously, according to analysis performed by Credit Agricole.
According to Comtrade data, the main destinations of Slovenian exports in 2020 were Germany (18.0%), Switzerland (12.1%),
Italy (9.3%), Croatia (8.0%) and Austria (6.4%), while that year’s imports came chiefly from Germany (14%), Switzerland (12.7%), Italy (10.8%), Austria (7.5%) and China (7.3%). Slovenia has an external trade deficit with EU member states that has been decreasing over recent years. On the other hand, the country has been enjoying an external trade surplus with non-EU member countries.
Slovenia took over the rotating presidency of the EU Council in 2021, and it was decided during its mandate that the Economic and Investment Plan for the Western Balkans would be brought forward, thus bringing concrete deliverables of the EU’s engagement in the Western Balkan region and establishing shared EU-Western Balkan priorities for the coming years, enabling the Union and this region to advance together towards more innovative, greener and digital economies.
The countries of the Western Balkans, and Serbia in particular, are long-term trade and investment partners of Slovenia. According to the latest data, Slovenia exported goods worth approximately €1.2 billion to Serbia, while the value of Serbian exports to Slovenia totalled €800 million.
Investment cooperation is also good. Slovenian investments in Serbia total almost a billion euros and Serbian investments in Slovenia stand at €250 million. To put these figures into context, the trade exchange has more than doubled over the last decade and is continuing to grow constantly.
The newly founded Alpine-Adriatic Danube Power Exchange – ADEX – will offer harmonised, one-stop-shop spot power trading services in Slovenia and Serbia, with the ambition to also extend operations and services to other countries in the region of Central and Southeast Europe (CSEE), according to a joint press release issued by the three companies.
