February 22 (SeeNews) - The European Commission (EC) said on Wednesday Slovenia should address imbalances constituted by weaknesses in the banking sector, corporate indebtedness, and fiscal risks.
"Relevant measures have been taken by the government to consolidate and restructure the banking sector, and to improve the governance of state-owned enterprises," the EC said in its report on macroeconomic imbalances. However, long-term sustainability of public finances still needs to be ensured, while the the business environment must be improved, it cautioned.
The Commission also noted that stock imbalances are gradually unwinding, including in light of resumed growth.
The EC praised Slovenia for achievements in the corporate sector, which has undergone a substantial deleveraging, and for the resumption of private investment. It warned, however, that stocks of inbound foreign direct investment remain low compared to regional peers.
Slovenia's public debt peaked in 2015 but, according to the Commission, a downward adjustment is expected in the coming years.
Slovenia saw a steady GDP growth of 2.5% in 2016, backed by export firms. However, a significant part of the economy is not contributing to the growth, namely state-owned firms and the sectors that they dominate, the EC said.
Slovenia is one of six EU countries seen to be experiencing economic imbalances. The others are Germany, Ireland, Spain, the Netherlands and Sweden.
The report on Slovenian is part of the EU's winter package of assessments of the Union member-countries' financial and economic situation.