March 15 (SeeNews) - Erste Group said it has increased its forecast for Slovenia’s economic growth in 2018 to 4.5%, from 4.0% predicted earlier on the back of higher-than-expected economic expansion last year.
"Following robust performance in 2017 (FY17 GDP at 5%) and taking into account resilient export performance and the strengthening domestic demand outlook, we have upgraded our GDP forecast to 4.5% for 2018," Erste Group analysts said in their latest macroeconomic outlook on Slovenia published on the bank's website on Wednesday.
Domestic demand is expected to remain the key growth driver ahead, while net exports should also remain supportive, although with a more modest impact compared to 2017 performance.
Ongoing improvement on the labour market and on the consumer sentiment side is seen also as favouring the private consumption footprint, while the pickup of EU funds should further boost investment activity, Erste said.
However, Slovenia's GDP growth is expected to slow down to 4.1% next year.
Inflation is seen maintaining a stable footprint during 2018, with the CPI growing 1.5% this year, before expanding further to 1.8% in 2019.
Erste added that the country's fiscal position should become stronger in 2018, after last year Slovenia's budget deficit decreased almost by half, to 0.8% of GDP. A budget surplus this year should be supported by strong tax revenues and decreasing interest expenditures, according to Erste analysts.
Erste also said that there will be no major developments as far as privatisation is concerned this year due to the upcoming parliamentary elections.
It concluded that Slovenia's privatisation process continues to stall, with the country abandoning the planned sale of the majority of banking group NLB by the end of 2017. Slovenia is currently in talks with the European Commission to postpone the sale until 2019.