LJUBLJANA (Slovenia), September 28 (SeeNews) - Slovenia's gross domestic product (GDP) will grow by 4.4% this year before slowing down to a relatively high level of 3.7% next year, the country's Institute of Macroeconomic Analysis and Development (IMAD) said.
Growth will continue to be underpinned by private sector and government investment, which will increase only slightly less than last year, the independent government office said in a statement on Thursday.
Export growth will also remain strong, yet somewhat lower than last year, consistent with more moderate growth in foreign demand, IMAD noted.
The office predicts that the lower growth rates of investment and exports will be the main reasons for a slightly lower economic growth than last year, which reached 4.9%.
"In the next two years economic growth will slow further, not only due to the gradually weaker growth in foreign demand, but increasingly as a consequence of demographic factors, i.e. a decrease in the working age population," IMAD explained.
It forecast employment growth will remain high this year, before moderating in the coming years, mainly under the impact of demographic change.
Wage growth, on the other hand, is predicted to strengthen in the 2018–2020 period, reflecting favourable economic developments and the increasingly limited supply of skilled labour.
Inflation is forecast to exceed the rate of 2% slightly by 2020.
"Price growth, which accelerated somewhat last year following a period of prolonged very low growth and deflation, will be slightly higher this year (at 1.8%), mainly owing to strong oil price rises and a gradual strengthening of growth in prices of services," IMAD forecast.
It noted that the main risks to the forecast are possible conditions in the international environment different from those assumed in the baseline scenario, which could lead to lower economic growth.
IMAD concluded that possibilities for higher economic growth (in the short term) are related to high consumer and business confidence and rising pressures on wage growth in the private and public sectors.
Slovenia's GDP growth rate rose to 4.9% in 2017, from 3.1% a year earlier.