Bank of Slovenia Boldly reduced the growth forecast in 2025
The decline in economic activity in the first quarter represents a significantly worse starting point for this year’s GDP growth, according to the Bank of Slovenia, where they reduced the forecast of this year’s economic growth by almost a percentage point, from 2.2 to 1.3 percent. For the next two years, it is estimated that growth will strengthen to 2.4 percent. Our economic dynamics are expected to remain higher than the growth of the euro area, which is expected to be 0.9 this year and 1.1 percent next year.
Infographic work
According to BS, increased customs and geopolitical insecurities are significantly influenced by this year’s reduced growth, while at home, the deterioration of the situation in investments. Higher customs duties are as much as 0.6 percentage points lower growth this year. At the same time, the pessimism of consumers strengthened in the first quarter, and private consumption has stagnated.
For the second quarter, the prospects are now positive, the central bank estimates and believes that the shrinkage of the economy was transient in the first quarter, so the year is expected to continue with positive growth. They expect primarily to grow private consumption and then state consumption. This is expected to increase private investments, and eventually expect a positive contribution to foreign exchange.
A sharper scenario has also been prepared at the BS, which provides even higher customs duties on US and Chinese goods. This could be economic growth this year and in 2026 by an additional 0.4 or 0.8 percentage points.
Inflation is supposed to rise due to food prices
Inflation is expected to strengthen to 2.5 percent this year, mainly due to the rise in food prices and services, while increasing salaries, and in the next two years it is to gradually decrease to 2.2 and then to 1.9 percent, thereby slightly higher than in the euro area.
The BS was considered a new pension reform in the forecasts. The country’s debt is expected to reach 66 percent of GDP this year and then decrease to 63 percent. Among the risks of public finances, they point to defense costs, but otherwise the highest risk of growth are the introduction of customs duties and impaired economic chains.
The level of survey unemployment is expected to remain at a very low level of about 3.4 percent. This year, they expect a nominally 5.5 % wage growth, which is expected to increase wages in the public sector. In the future, the annual wage growth is expected to remain robust, over two percent.
