LJUBLJANA (Slovenia), March 12 (SeeNews) – Erste Group said it expects Slovenia’s economic growth to decelerate to 3.2% in 2019, from 4.5% last year, with risks mainly linked to external demand uncertainties.
Slovenia's economic expansion is expected to further slow down to 3.1% in 2020.
“Going into 2019, we expect to see the growth rate maintaining a gradually decelerating tone, with domestic demand set as the key growth engine ahead, while the supportive net exports role should start diminishing, as the slowdown in Slovenia's main export markets affects the exports profile,” Erste analysts said in their latest macroeconomic outlook on Slovenia on Monday.
Slovenia's GDP growth decelerated to 4.1% on the year in the fourth quarter of 2018, from 5.0% in previous quarter.
"Despite some acceleration spikes above the 2% region, due to more pronounced fuel and energy price pickups, 2018 was mainly marked by stable inflation developments, with the average CPI figure landing at 1.7% (vs. 1.4% from 2017)," Erste said. The analysts added they expect steady inflation developments going forward, with more intensifying domestic demand driving upside pressures, while cost-side pressures (namely energy prices) are expected to have a somewhat more moderate impact on the CPI trajectory.
"We thus see average inflation moving around the 1.5% region in 2019," Erste said.
The ongoing improvement on the fiscal side continues, with the budget balance expected to bring another surplus, amidst stronger tax revenues and decreasing interest expenditures, the analysts added.
On the financing side, Erste said Slovenia was again among the first central and eastern European countries that have successfully issued a new bond in 2019, thus covering a large portion of its financing needs early in the year, while ensuring a comfortable position ahead.