July 4 (SeeNews) - Slovenia has achieved a strong post-pandemic recovery, but high inflation, supply chain bottlenecks and other impacts from the war in Ukraine are draining economic momentum, the Organisation for Economic Co-operation and Development (OECD) has said.
"Slovenia should focus on reining in inflation and then accelerating reforms to bolster productivity and foster stronger and more sustainable growth for the longer term," the OECD said in the July edition of its Economic Survey of Slovenia.
Decentralised wage setting could improve labour market dynamics, by enabling firms to use pay to attract workers and creating incentives to invest in training, while better governance of state-owned enterprises and enhanced competition can also optimise labour resources across the economy, the OECD said.
"Slovenia’s economy was recovering well from the COVID-19 crisis, but the war in Ukraine is amplifying inflationary pressures, exacerbating supply chain disruptions and weighing on growth," OECD Chief Economist and Deputy Secretary-General Laurence Boone said.
An ageing workforce means Slovenia needs much stronger productivity growth to keep raising living standards as well as strengthening the pension system, he added.
Last month, OECD downgraded its forecast for the economic growth of Slovenia in 2022 to 4.6% from 5.4% predicted in December. "GDP growth is projected to moderate to 4.6% in 2022 and 2.5% in 2023, in part reflecting the negative impact from the war in Ukraine. Domestic demand will be the main growth driver," OECD noted in its June 2022 Economic Outlook report.