November 1 (SeeNews) - The European Bank for Reconstruction and Development (EBRD) said on Thursday it has raised its forecast for Slovenia's economic growth in 2018 to 4.2%, from 4.0% projected in May.
Slovenia's growth is being driven by domestic demand, underpinned by both higher investment and private consumption, the EBRD said in its new Regional Economic Prospects report.
“Stronger growth led to a fall in the unemployment rate to below 6.0 per cent in the first half of 2018 and to labour shortages becoming more prevalent,” the report added.
The growth of the Slovenian economy is expected to slow down to 3.3% in 2019.
"The medium-term outlook will depend primarily on the speed of structural reforms, which have progressed but are still far from complete," the EBRD noted.
Public debt remains high at 73% of GDP (end-June 2018), and there is a need for structural reforms in areas such as public wages, pensions, health and education, the report noted.
“Downside risks come from possibly weaker demand from Slovenia’s main trading partners, high corporate over-indebtedness as well as slow pace of structural reforms and privatisation, a stronger than envisaged government investment cycle and growth in private consumption could push up growth rates above projections.”
The EBRD expects economic growth in Southeast Europe (SEE) to stand at 3.5% in 2018 and at 3.2% next year.