Being one of the EU countries that suffered the greatest deterioration in relative economic development during the crisis, Slovenia will be able to catch up with the EU average only by a more lasting improvement in the competitiveness of the economy. The crisis also disrupted macroeconomic balances, which are improving only gradually. The general government deficit is narrowing slowly, while the quality and sustainability of consolidation are weakened by the temporary nature of measures. Public debt has already exceeded the ceiling set within the broad Stability and Growth Pact framework in the EU. The banking system, where an intensive restructuring process is underway, has yet to provide the sources of funding necessary for faster growth. Creating a stable macroeconomic framework and ensuring funding, together with the completion of corporate restructuring and privatisation, will be the basis for a further strengthening of the competitiveness of the economy. This has improved significantly in recent years, but the positive movements were insufficiently based on an increase in value added. Improving competitiveness by greater use of knowledge to raise value added of the economy is also vital for the creation of high-quality jobs and improvement in labour market conditions. The decline in employment and increase in unemployment during the crisis have contributed to a significant deterioration in the material living conditions and social inclusion of households. Welfare is also increasingly jeopardised by social protection systems not being adjusted to the ageing of the population. Environmental development is marked by the relatively high energy and emission intensity of the economy, which could jeopardise the attainment of long-term objectives in this area when economic growth recovers.
Priority measures should be focused on:
- Establishing a medium-term development framework and improving the performance of the government and its institutions in making and executing development decisions;
- Increasing the value added of the economy and creating high-quality jobs by boosting the innovative capacity of businesses, matching human capital with the needs of a more competitive economy and providing a business environment that fosters entrepreneurship;
- Establishing an effective state asset management system, including further privatisation of state-owned enterprises;
- Sustainable fiscal consolidation, with emphasis on more permanent measures for reducing expenditure;
- Adjusting social protection systems to the needs of a long-living society and the relationship between public and private sources of funding to ensure the quality of public services and fiscal stability in the long term;
- Completing banking system stabilisation, carrying out comprehensive corporate restructuring and increasing equity capital, and development of non-bank financial sectors;
- Increasing labour market efficiency, particularly in the areas of labour reallocation and wage flexibility, improving the transition of young people to the labour market and increasing the employment rate of older people;
- Reducing environmental pressures by more efficient use of energy and raw materials, focusing on measures promoting sustainable mobility.
Slovenia's development - Indicators: