Economy of Slovenia From Wikipedia, the free encyclopedia Ambox current red.svg This article is outdated. Please update this article to reflect recent events or newly available information. (December 2012) Economy of Slovenia Ljubljana 070.JPG Ljubljana Rank 74th (nominal) / 90th (PPP) Currency € (EUR) Fiscal year 1 January – 31 December Statistics GDP= 27 billion EUROS in 3 quarters 2013 [1]
GDP growth Decrease GDP Growth: -2.7% [1]
GDP Per capita: $ 18497 USD (PPP, 2014 est.), $22,916, €17,286 (2010) GNP: 8815.90 EURO million CPI=97. 76 for the last year Inflation: 5.94% Core inflation: 3.26% CPI: 121.36
[2] /> (30th, nominal; 30th, PPP) GDP by sector Agriculture 2.7%, Industry 27.6%, Services 69.7% (2012 est.)[1]
below poverty line 12.7% (2010)[3] Gini coefficient 23.8[3] (List of countries) Labour force Decrease923,000 (2012 est.)[1] Labour force by occupation agriculture: 2.2%, industry: 35%, services: 62.8%, (2009 est.)[1] Unemployment rate: 13% (2014) [1] Main industries ferrous metallurgy and aluminum products, lead and zinc smelting; electronics (including military electronics), trucks, automobiles, electric power equipment, wood products, textiles, chemicals, machine tools [1] Ease of doing business rank 35th[4] External Exports Exports: 1620.75 EURO millions [1] Export goods manufactured goods, machinery and transport equipment, chemicals, food [1] Main export partners Germany 20.0%
Italy 12.0% Austria 7.9% Croatia 6.2% France 4.8% Russia 4.6% (2012 est.)[5]
Imports: 1700 EURO million [1] Import goods machinery and transport equipment, manufactured goods, chemicals, fuels and lubricants, food Main import partners Italy 16.3%
Germany 16.2% Austria 10.4% Croatia 4.8% Hungary 4.0% (2012 est.)[6]
FDI stock Increase17.91 billion (31 December 2012 est.)[1] Public finances Public debt Increase53.2% of GDP (2012 est.) Revenues Decrease$20.5 billion (2012 est.)[1] Expenses Decrease$22.59 billion (2012 est.)[1] Credit rating Standard & Poor's:[7] A+ (Local) A+ (Foreign) AAA (T&C Assessment) Outlook: Negative[8] Moody's: A1 Outlook: Negative[9] Fitch: A Outlook: Negative[10] Foreign reserves Increase$1.154 billion (31 December 2012 est.)[1] Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars
Higher GNI per capita compared to Slovenia Lower GNI per capita compared to Slovenia
Slovenia today is a developed country that enjoys prosperity and stability as well as a GDP per capita at 88% of the EU27 average.[11] It was the first new member of the European Union to adopt the euro as a currency in January 2007 and it has been a member of the Organisation for Economic Co-operation and Development since 2010.[12] Slovenia has a highly educated workforce, well-developed infrastructure, and is situated at a major transport crossroad.[12] On the other hand, the level of foreign direct investment is one of the lowest and the Slovenian economy has been severely hurt by the European economic crisis, which started in late 2000s.[12] Almost two thirds of the working population are employed in services.[1] Contents [hide] 1 History 2 Trade 3 Economic performance 4 See also 5 References History[edit]
Although it comprised only about one-eleventh of Yugoslavia's total population, it was the most productive of the Yugoslav republics, accounting for one-fifth of its GDP and one-third of its exports.[13] It thus gained independence in 1991 with an already relatively prosperous economy and strong market ties to the West. Since that time it has vigorously pursued diversification of its trade with the West and integration into Western and transatlantic institutions. Slovenia is a founding member of the World Trade Organization, joined CEFTA in 1996, and joined the European Union on 1 May 2004. In June 2004 it joined the European Exchange Rate Mechanism. The euro was introduced at the beginning of 2007 and circulated alongside the tolar until 14 January 2007. Slovenia also participates in SECI (Southeast European Cooperation Initiative), as well as in the Central European Initiative, the Royaumont Process, and the Black Sea Economic Council. In the late 2000s economic crisis, the Slovenian economy suffered a severe setback. In 2009 the Slovenian GDP per capita shrunk by −7.9 %, which was the biggest fall in the European Union after the Baltic countries and Finland.[citation needed] After a slow recovery from the 2009 recession thanks to exports,[14] the economy of Slovenia again slid into recession in the last quarter of 2011.[15] This has been attributed to the fall in domestic consumption and the slowdown in growth of exports.[15] Slovenia mainly exports to countries of the eurozone.[12] The reasons for the decrease in domestic consumption have been multiple: fiscal austerity, the freeze on budget expenditure in the final months of 2011,[16] a failure in the efforts to implement economic reforms, inappropriate financing, and the decrease in exports.[17] In addition the construction industry was severely hit in 2010 and 2011.[15] Trade[edit]
Slovenia's trade is orientated towards other EU countries, mainly Germany, Austria, Italy, and France. This is the result of a wholesale reorientation of trade toward the West and the growing markets of central and eastern Europe in the face of the collapse of its Yugoslav markets. Slovenia's economy is highly dependent on foreign trade. Trade equals about 120% of GDP (exports and imports combined).[clarification needed] About two-thirds of Slovenia's trade is with other EU members. This high level of openness makes it extremely sensitive to economic conditions in its main trading partners and changes in its international price competitiveness. However, despite the economic slowdown in Europe in 2001-03, Slovenia maintained a 3% GDP growth. Keeping labour costs in line with productivity is thus a key challenge for Slovenia's economic well-being, and Slovenian firms have responded by specializing in mid- to high-tech manufacturing. Industry and construction comprise about one quarter of GDP. As in most industrial economies, services make up an increasing share of output (57.1 percent), notably in financial services. Economic performance[edit]
The traditional primary industries of agriculture, forestry, and fishing comprise a comparatively low 2.5 percent of GDP and engage only 6 percent of the population. The average farm is only 5.5 hectares. Part of Slovenia lies in the Alpe-Adria bioregion, which is currently involved in a major initiative in organic farming. Between 1998 and 2003, the organic sector grew from less than 0.1% of Slovenian agriculture to roughly the European Union average of 3.3%.[18] Public finances have shown a deficit in recent years. This averaged around $650 million per annum between 1999 and 2007, however this amounted to less than 23 percent of GDP.[19] There was a slight surplus in 2008 with revenues totalling $23.16 billion and expenditures $22.93 billion.[20] Government expenditure equalled 38 percent of GDP.[citation needed] As of January 2011, the total national debt of Slovenia was unknown. The Statistical Office of the Republic of Slovenia (SURS) reported it to be (not counting state-guaranteed loans) 19.5 billion euros or 54.2% of GDP at the end of September 2010. According to the data provided by the Slovenian Ministry of Finance in January 2011, it was just below 15 billion euros or 41,6% of the 2009 GDP. However, the Slovenian financial newspaper Finance calculated in January 2011 that it is actually 22.4 billion euros or almost 63% of GDP, surpassing the limit of 60% allowed by the European Union.[21][22] On 12 January 2011, the Slovenian Court of Audit rejected the data reported by the ministry as incorrect and demanded the dismissal of the finance minister Franc Križanič.[23] Slovenia's traditional anti-inflation policy relied heavily on capital inflow restrictions. Its privatization process favoured insider purchasers and prescribed long lag time on share trading, complicated by a cultural wariness of being "bought up" by foreigners. As such, Slovenia has had a number of impediments to foreign participation in its economy. Slovenia has garnered some notable foreign investments, including the investment of $125 million by Goodyear in 1997. At the end of 2008 there was around $11.5 billion of foreign capital in Slovenia. Slovenians had invested $7.5 billion abroad. As of 31 December 2007, the value of shares listed on the Ljubljana Stock Exchange was $29 billion. Investments from neighboring Croatia have begun in Slovenia. On 1 July 2010, Droga Kolinska was purchased by Atlantic Group of Croatia for 382 million euros. In June of 2013, Slovenia's largest food retailer Mercator, was purchased by Croatia's Agrokor for 454 million euros. Croatian investments into Slovenia are expected to increase in the years to come.[citation needed]
Recent Downturn The economy of Slovenia has been suffering through a recession. This problem is similar to the issues that many other European countries are facing such as Greece and Cyrus. The recession started because the three largest banks in Slovenia have crashed. The benefit of Slovenia is that they have a relatively small banking industry contain assets only 130% of GDP. The three major banks are now currently waiting for the government to bail them out. This has become a large issue for the government because they have only set aside 1.2 billion Euros to spark economic growth. This amount is expected to be an inadequate amount. These banks are also losing money as the ratio of non-performing loans rose from 13.2 to 17.4 this is the third highest ratio in Europe. The IMF has also estimated that bailing out these banks will increase public debt by 11%, bringing public debt to a total of 74%. The IMF has stated that their concerns for Slovenia are fuelled by the fact that their economic structure is somewhere between a planned economy and a market-oriented one. This in-between economic structure has lead to a decrease in FDI, which has lead to a decrease in GDP adding to the recession. A lower FDI means the government needs to inject even more money into the economy at their own risk. GDP this year will fall by 2.7%. The IMF says government needs to spark the economy to at least decrease the fall in GDP.
Solution Slovenia plans to make these changes to increase their GDP. The first step the government is taking to use the expansionary fiscal policy. The government is adopting a new pension plan that they plan to use to eliminate public debt. The second change they are going to make is offering better unemployment insurance. The government hopes to yield longer employment life time, per job as people will become more comfortable waiting to find the right job. The third step is to boost economic output and the process to achieve this is to create more vibrant competition. The EU said that it will cost 5 billion Euro to bail the major banks out. Once the banks recover they will spark the economy with loans fueling growth. The goal of the Slovenian government was to not get the IMF involved, however the IMF understands these steps are very expensive and will cost more than the Slovenia government has planned for and will require their assistance in turning their economy around. Slovenia can also seek help from the EU, but are trying not to as the EU would become the 6th country in the euro zone to seek bailout.