The European Commission forecast a 0.1% GDP contraction in Slovenia for 2014 and a 3.9% government deficit, while it expects 1.3% growth and a 3.3% deficit in 2015. Despite the improved prospects, Slovenia remains the only EU member alongside Cyprus to remain in recession in 2014.
The recovery in Slovenia is projected to begin in the second half of the year on the back of improvements in the international environment, but bank lending to the private sector is expected to remain subdued due to the unfinished process of deleveraging.
The figures are an improvement from the November projection, the Commission however also corrected the deficit for 2013 from 5.5% to 14.9% and noted an increasing debt level.
The GDP forecast has been corrected from a 1% drop for 2014 and 0.7% growth for 2015, while the Commission also projected in November a 7.1% deficit (3.6% excluding bank recapitalisation) for this year and a 3.8% shortfall in 2015.
In line with the procedure addressing the excessive deficit, Slovenia should reduce the deficit to 3.3% of GDP this year and to 2.5% next year.
Meanwhile, Slovenia's public debt, which stood at 22% of GDP in 2008, now already exceeds the 60% set as a ceiling in EU rules but it is still below the bloc's average.
Brussels substantially downgraded the forecast regarding debt, forecasting a debt level of 75.4% of GDP for this year and 78% for 2015 due to the bailout costs.
Unemployment is projected to remain high, 10.8% this year and 10.7% in 2015, which is below the eurozone average but above the average for the entire EU.
Inflation is expected to be on the low side, just 0.8% this year before it rises to 1.3% in 2015.
Source: Slovenia Times
