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OECD lowers Slovenia's 2019 GDP growth forecast to 3.1%

Nov 21, 2019, 4:16:11 PMNews by : Klaudjo Jonuzaj
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LJUBLJANA (Slovenia), November 21 (SeeNews) –The Organisation for Economic Co-operation and Development (OECD) said on Thursday it has revised its forecast for Slovenia's economic growth in 2019 to 3.1% from 3.4% predicted in May.

OECD lowers Slovenia's 2019 GDP growth forecast to 3.1%
Source: Slovenian government

"Economic growth is projected to remain at around 3% until 2021," OECD said in its latest economic outlook on Slovenia.

Private consumption will continue to be the main driver of growth, sustained by higher wages and solid employment gains, the organization said, adding that uncertainty about the external environment will slow the pace of new business investment.

“Improvements in export performance will slow with rising labour unit costs. The import content of exports is rising, as foreign demand for goods with higher domestic value added weakens. Domestic demand is increasingly satisfied through imports, owing to tightening capacity constraints,” OECD noted.

According to the organization, fiscal policy will remain supportive of growth in the coming two years, driven by higher public sector wages and social transfers.

“As favourable borrowing conditions persist, growing domestic inflationary pressures call for a moderation in the fiscal stimulus,” OECD noted.

Measures to restrict pathways to early retirement would mobilise older workers, while accelerating privatisations and decentralising wage bargaining, would contribute to improve labour allocation, and alleviate labour shortages and wage pressures.

Downside risks stem from prolonged tensions in international trade, the organization said, adding that investment will continue to slow somewhat, despite higher construction activity, as spending on machinery and equipment weakens.

“A slow recovery of exports and business investment is expected towards the end of 2021 as international trade expands more rapidly,” the organization said, adding that the main upside risk stems from a faster recovery of business sentiment and business investment growth.

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