January 19 (SeeNews) - Slovenia's economic growth is expected to slow in 2023, with downside risks stemming mainly from spillovers related to the war in Ukraine, but is projected to rebound to its potential of around 3% over the medium term, the International Monetary Fund (IMF) said.
"Russia's invasion of Ukraine poses considerable challenges, however, mainly through weaker external demand and high commodity prices, which are weighing on the economy. Growth is expected to slow in 2023 with downside risks stemming mainly from war-related spillovers," the IMF said in a statement on Wednesday, following the conclusion of Article IV consultations.
According to the IMF, A tighter fiscal stance is warranted in 2023, and energy price mitigation measures should be more targeted to support monetary policy in the effort to reduce inflation, while growth-friendly consolidation would help rebuild fiscal buffers.
Slovenia’s macroprudential policies should remain flexible to ensure the right balance between financial stability and credit supply to the economy, as continued close monitoring of asset quality and appropriate loan-loss provisioning remain important, the IMF said.
The country's government focus should be on enhancing supervision to ensure that accurate and up-to-date beneficial ownership information of legal persons is available to competent authorities and reinforcing money laundering investigations and convictions.
IMF also recommended Slovenia ensure alternative gas supplies, encourage energy savings, prepare contingency plans and secure sustained and inclusive growth calls for further labor market reforms and digitalisation to boost productivity.
An IMF mission, led by Donal McGettigan, visited Slovenia during November 10 - 21 to review the latest economic developments, the functioning of the financial sector and the banking system, and the challenges for the future, and discuss the mitigation of the risks inherent in fiscal and macroprudential policy, energy security, climate change, digitalisation, and the labour market.