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Slovenia Business Week no. 19: European Commission Upgrades Growth Forecasts for Slovenia

The European Commission has upgraded its 2006 economic growth forecast for Slovenia by 0.3 percentage points to 4.3% in its spring report on economic outlook in the EU

The European Commission has upgraded its 2006 economic growth forecast for Slovenia by 0.3 percentage points to 4.3% in its spring report on economic outlook in the EU.

The Commission also lowered the anticipated inflation rate in Slovenia for this year to 2.4% from 2.5% in its autumn report, backing its decision by saying that inflation-busting measures are progressing well in Slovenia.

The report leaves the outlook in Slovenia for 2007 almost unchanged compared to the autumn report: economic growth is expected to stand at 4.1%, while inflation is anticipated at 2.5%.

Slovenian growth is a fair way above the 2.3% average growth rate anticipated for the EU this year. Meanwhile, Slovenia's inflation forecast is only a touch above the 2.1% expected in the EU this year.

According to the Commission, the double pricing mechanisms in place in Slovenia should ensure a limited impact on prices of the planned euro changeover.

The report, released just over a week before the Commission releases a report on Slovenia's readiness for the euro, adds that the current government policies and exchange rate stability are thwarting inflationary pressures.

Slovenia is well on the way to meeting other eurozone membership criteria as well: the budget deficit is set to stand at 1.9% this year and 1.6% next year (limit is 3%), while the general government debt is to remain below 30% in both years (limit is 60%), according to the report.

However, European Commissioner for Economic and Monetary Affairs Joaquin Almunia did not wish to speculate about the contents of the convergence report for Slovenia.

Among the risks that could threaten Slovenia's steady inflation rate, the Commissions points to the price of energy, foremost fuel and electricity.

According to the report, economic growth in Slovenia will be fuelled by domestic spending, while exports are slated to have a smaller positive impact than in 2005.

Source: Slovene Press Agency STA

Author: STA