May 11 (SeeNews) - The European Commission said on Thursday it has raised its forecast for Slovenia's economic growth this year to 3.3% from 3.0% projected in February on the back of private consumption and investment.
Slovenia entered 2017 with improving consumer sentiment, increasing retail sales and further decreases in unemployment, all of which are expected to back growth in private consumption and contribute to overall economic advancement, the Commission said in its Spring 2017 Economic Forecast report.
Both private and public investment are also projected to positively contribute to growth, the Commission said. Domestic demand is forecast to be the main growth driver in 2017 and 2018, it added.
In 2018, Slovenia's economic growth is expected to slow slightly to 3.1%.
Risks to the growth outlook are tilted to the upside, the Commission noted.
"Upside risks are primarily domestic, as improving sentiment, better access to credit and positive decisions regarding some large investment projects under consideration could increase investment more than expected", it said. "The risks to the downside are mainly external and relate to the future development of energy and raw materials prices".
In terms of the country's budget, the Commission expects the general government deficit to have fallen to 1.8% of GDP in 2016 from 2.9% a year earlier, mainly due to higher-than-expected current revenues and a large decline in public investment following the end of the 2007-2013 EU funding period.
In 2017, the general government deficit is forecast at 1.4% of GDP, on the back of increased public investments, buoyant tax revenues and social contributions. In 2018, under a no-policy-change assumption, the general government deficit is expected to decrease further to 1.2% of GDP, mainly due to economic growth and improved labour market conditions.
The debt-to-GDP ratio peaked at 83.1% in 2015. Supported by the economic recovery and a reduction in precautionary cash buffers, public debt is forecast to decline continuously to 75.5% of GDP in 2018, the Commission concluded.
Slovenia ended 2016 with a GDP growth rate of 2.5%, up slightly from 2.3% a year earlier.