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Slovenia Business Week no. 06: Chamber of Commerce and Industry of Slovenia Revises 2006 GDP Estimate Upwards

The Chamber of Commerce and Industry of Slovenia estimates that Slovenia's economy expanded by 5.1% in 2006, up from its original forecast of 4.5%, on the back of strong investment and growth

The Chamber of Commerce and Industry of Slovenia (CCIS) estimates that Slovenia's economy expanded by 5.1% in 2006, up from its original forecast of 4.5%, on the back of strong investment and growth.

This year GDP growth is projected to amount to a mode moderate 4.2% or 4.3% in line with expectations for the eurozone, Irena Rostan, the head of the CCIS's economic outlook and policy services department, told the press on Monday, 29 January.

Favourable factors last year included a mild winter, which provided an extra boost to construction. Although exports remain the main engine of growth overall, investment accounted for the bulk of growth last year, having expanded by 11%, Rostan said.

Growth was also fuelled by the elimination of tax breaks on investment in equipment as of this year, as many companies decided to invest towards the end of 2006 to take advantage of the favourable tax treatment.

According to Rostan, investment will continue to buoy growth this year with an estimated growth of 7% to 8% in real terms. Exports are projected to increase by 9.5% this year and 7.5% in 2008.

The CCIS expects inflation to hover around 2.6% this year and next, while the Labour Force Survey-based unemployment rate is to be at 6.5% over the coming two-year period.

Wages are estimated to have increased by 2.4% in real terms last year, with the figure expected to amount to 2.2% for 2007 and 2008.

According to Rostan, this means that wages will continue to outpace inflation in real terms, however they will still lag behind productivity gains.

Joze Smole, the head of the CCIS's task force for social dialogue, said it was crucial that wages should be adapted to the actual economic environment on an ongoing basis.

Employers and trade unions agree that wages need to grow in line with inflation and productivity, but it is crucial that they lag behind productivity growth, which facilitates investment in new technologies, know-how and markets, he said.

Source: Slovenian Press Agency STA

Author: STA, Slovenian National Press Agency