Spring forecast

Economic growth is expected to strengthen to 2.1% this year. Domestic consumption will be a key driver of higher GDP growth this year, in particular continued growth in private consumption supported by rising wages and social transfers, as well as a recovery in investment after last year’s decline. In particular, investment activity of the government sector will strengthen, supported by funds from the Recovery and Resilience Plan and the Fund for the Reconstruction of Slovenia, established in response to the 2023 floods. However, the acceleration of economic growth compared to last year will be slightly weaker than anticipated in the autumn forecast. Goods export growth will be somewhat lower after last year’s high growth, which weakened significantly in the fourth quarter, and will largely align with the growth in foreign demand. Growth in services exports will further accelerate. Uncertainty and the weak economic recovery in Slovenia’s trading partners will lead to cautious investment decisions, particularly in the foreign markets-oriented part of the economy. Some impetus comes from lower interest rates, which will have a particular impact on housing investment in the medium term. In 2025, growth in government consumption is expected to moderate compared to last year. This year, post-flood reconstruction will continue to contribute to growth in government spending, not only on investment but also on goods and services. Additionally, the first effects of the new long-term care benefits implemented in mid-2025 are expected to start emerging. Employment stagnated at record levels for much of last year and we expect low growth this year, which could pick up slightly over the next two years and, as in recent years, will be driven primarily by the employment of foreigners. Unemployment will continue to decline slightly. In addition to the transition into employment, this will be significantly driven by a growing transition into inactivity or retirement, as demographic changes increasingly shape the labour market alongside economic conditions. Overall growth in the average gross wage will remain relatively high this year and is expected to weaken somewhat thereafter, but real growth will be above the levels seen a decade ago. Barring shocks, price growth is expected to be subdued this year in most groups, with services still outpacing overall inflation. Measures related to energy prices and their gradual phase-out will influence year-on-year inflation fluctuations, with the average inflation expected to remain around 2% throughout the forecast period. The realisation of the spring forecast is subject to significant downside risks in the international environment. The greatest downside risk to GDP growth arises from significantly heightened uncertainty regarding trade policies–partially incorporated in the baseline assumptions–linked to the potential escalation of US protectionist measures and retaliatory actions by affected countries.