Spring forecast

Under the baseline scenario, which does not assume persistently elevated oil and gas prices or disruptions to their supply, economic growth in Slovenia is projected to strengthen to 2.0% this year – broadly in line with the autumn forecast – assuming the anticipated growth in external demand. A similar pace of economic activity growth is expected over the following two years. The export sector will gradually recover, supported by improved prospects for industrial production in Slovenia’s main trading partners. Investment activity will continue to expand, driven primarily by public investment. Growth in private consumption will strengthen this year and align more closely with disposable income growth than in 2025, when the household saving rate increased markedly. Growth in government consumption in 2026 will also exceed last year’s level, largely due to the full-year implementation of institutional long-term care services. Labour market developments are increasingly influenced by demographic changes; owing to the limited supply of labour, employment is expected to stagnate, while unemployment will remain low. Wage growth will be higher this year than last. Growth will be particularly pronounced in the private sector, where last year’s slowdown was largely statistical in nature (extra payments were significantly reduced following the introduction of the winter bonus, which is not included in wage growth). In the coming years, overall wage growth in the public sector will gradually moderate in line with the envisaged implementation dynamics of the wage reform; it is also expected to slow in the private sector as firms seek to preserve competitiveness. Inflation this year (2.5% on average) will be similar to last year. Above-average growth in services and food prices is expected to persist, partly reflecting the impact of higher labour costs. Beyond 2026, assuming no shocks, inflation is expected to gradually decline towards 2%, while services price inflation is projected to remain above average, with core inflation slightly exceeding 2% over a prolonged period. The Spring Forecast is subject to considerable downside risks arising from the international environment and, to a lesser extent, from domestic economic environment. A protracted persistence or further escalation of geopolitical conflicts, including their potential spread to the broader Middle East region, would likely result in higher commodity prices, intensified inflationary pressures, and disruptions to global supply chains, while a prolonged closure of the Strait of Hormuz would further intensify these effects. A further increase in trade barriers, alongside continued uncertainty in global trade, also constitutes a significant downside risk. Risks in the domestic environment are primarily associated with the capacity for implementing large-scale infrastructure projects, and rising labour costs. Upside risks to economic growth stem from a stronger-than-expected impact of defence and infrastructure expenditure (both domestically and abroad), more effective attraction of highly skilled labour and the positive impact of reform measures.