July 12 (SeeNews) - The European Commission said on Thursday it has increased its forecast for Slovenia's economic growth this year to 4.4% from 4.7% projected in May, as external demand has grown less than previously expected.
Real GDP growth is expected to slow to 3.5% in 2019, the European Commission said in its Summer 2018 Economic Forecast publication.
Net exports’ growth contribution is likely to turn negative as domestic demand strengthens, supported by growing employment, wages and favourable financing conditions, the EC said.
Business investment growth is forecast to continue at a rather high rate on the back of high capacity utilisation and a tightening labour market amid stronger balance sheets and improved profitability, the Commission noted.
A more intensive use of EU funds for investment projects is forecast for 2018 and 2019.
Downside risks to the growth outlook are linked to developments in Slovenia’s key export markets and the possibility that labour supply shortages could start to limit growth, the Commission said. "On the upside, the positive impact of improving access to credit could be larger than expected."
Slovenia's consumer prices are projected to rise by 2.1% in 2018 and 2.2% in 2019, slightly higher than the 1.9% and 2.0% expected in the spring forecast, driven by energy prices and wages growth.
Slovenia ended 2017 with a real GDP growth of 5.0%, making the country's economy one of the fastest growing in the euro area.