Ljubljana, 21 March (STA) - IMAD, the government's macroeconomic forecaster, has downgraded Slovenia's economic growth forecast for this year by 0.3 points in real terms to a still robust 3.4%, citing weaker export demand. Growth is projected to slow further next year, to 3.1%, IMAD said on Thursday.
The forecast marks a significant slowdown from the 4.5% growth rate that Slovenia recorded last year according to preliminary estimates, but it remains strong and is still well above the projections for the eurozone as a whole, which is expected to grow by well under 2% this year.
The revised budget for 2019 that the National Assembly passed in a re-vote yesterday assumes growth will stand at 3.7% this year.
IMAD forecasts that export growth will slow by over two points compared to last year to 5.1%, before ticking up slightly to 5.3% in 2020. As a result, the net contribution of foreign trade will be close to zero.
Private as well as government spending are expected to offset the weak exports, the forecast suggests.
Household spending growth is projected to remain strong and above last year's level (2.9% this year and 2.4% in 2020), with government spending expected to grow at a slightly slower pace of 2.2% and 1.9% respectively.
Investment spending will weaken substantially, on the other hand, with growth projected to slow to 7.7% this year and 7% in 2020 compared to low double-digit rates recorded in the last two years.
Job creation will continue, albeit at a slower pace: having hovered around 3% in the previous years, employment growth is projected to slow to 2% this year and 1% in 2020.
IMAD says job gains will be affected by the continued decline of the working-age population as the population as a whole ages.
Inflation will remain moderate and below 2%, the forecast suggests.
IMAD lists several risks that could affect its projections, among them a disorderly Brexit, US protectionism, and slowing growth in China.