The Slovenian economy is growing at a faster-than-expected rate, something that will have positive effects for the budget deficit and bring a better standard of living for Slovenians, PM Janez Jansa told the press in Ljubljana on Thursday, 28 September
"Compared to the average in the EU, Slovenia's growth will be well above the median, as it will stand between 4% and 5%," Jansa said as he presented revised economic growth figures for 2006 and 2007 from the Institute for Macroeconomic Analysis and Development (IMAD).
The PM says that the upgraded growth forecasts are a sign that some of the economic measures taken by the government are producing results already.
"In the coming years, citizens can expect to see their living standards and welfare improve as Slovenia closes the gap to the EU average," he said.
IMAD's autumn report was on the agenda of today's session of the cabinet, which also discussed the budget bills for the next two years.
According IMAD director Janez Sustersic, this year's economic growth is to stand at 4.7%, which is 0.5 points higher than forecast by the institute in spring. The institute expects growth to stand at 4.3% in 2007.
The growth in Slovenian exports - particularly those destined for the EU, where there have been signs of an economic upturn lately - and greater investment at home were the main reasons for faster-than-expected growth, Sustersic told a press conference following the cabinet's session.
As a result of the faster-than-expected growth, the budget deficit is expected to be lower than originally planned, Jansa said.
According to Jansa, the 2007 budget deficit is to stand at 1% of GDP, which is 0.24 points below initial plans. Meanwhile, the 2008 budget deficit is to be below 1% of GDP.
Presenting the main figures from IMAD's autumn report, Jansa said that labour productivity growth is to stand at between 3% and 4%, while wages are to grow by 2% to 3%.
He said that unemployment as measured by the labour survey method will hover at around 6.5% in the coming two years. Given the other macroeconomic indicators, this is a good result, he added.
Inflation remains the only major risk as far as adopting the euro is concerned, said Jansa, and pointed to the volatile prices of fuels, which have contributed half of this year's growth of the consumer price index.
According to Sustersic, IMAD has also raised the inflation outlook, with price expected to grow by 2.7% this year (0.6 points more than anticipated in the spring report) and by the same rate next year.
Moreover, the liberalisation of the electricity market for households represents a risk for inflation, as prices are set to rise, Jansa said. He added that the price increases are expected to be within tolerable limits.
Author: STA, Slovenian National Press Agency