LJUBLJANA (Slovenia), November 7 (SeeNews) – The European Commission said on Thursday it has lowered its forecast for Slovenia's economic growth this year to 2.6% from 3.2% projected in July, while domestic demand is expected to remain strong.
In the first half of 2019, Slovenia’s economy grew by 3.0% year-on-year, after a revised growth rate of 4.1% in 2018, the European Commission said in its Autumn 2019 Economic Forecast report.
“Domestic demand growth was driven by investment spending, while private consumption grew somewhat slower,” the Commission said, adding that the government budget balance is forecast to remain in surplus, with a slightly improving structural balance position in the coming years.
GDP growth is forecast to average 2.7% in both 2020 and 2021, the Commisssion noted, adding that growth is expected to continue to be driven by domestic demand, with a negative contribution from net exports over the forecast horizon.
“At 1.8%, HICP inflation is projected to be lower in 2019 than it was in 2018, mainly due to the slowdown in energy and food price inflation,” the Commission said, adding that inflation is expected to modestly accelerate – to 1.9% in 2020 and 2.0% in 2021.
According to the Commission, negative risks to growth mainly stem from the external outlook.
“A sharper-than-expected slowdown in export demand growth would not only affect exports but also business investment," the Commission said, adding that on the upside, household consumption could increase faster than currently projected as the saving rate remains high.