Slovenia Business Forecast Report Q2 2011
Business Monitor International, March 2011, Pages: 45
Expect Lower Growth Over Long Term!
A weak economic recovery, continuation of tight credit markets and high unemployment suggest 2011 will be a tough year for Slovenia’s centre-left coalition government. While the key governing parties managed to hold on to support levels at local elections in October 2010, we caution that the race leading up to the 2012 general elections is likely to be much tighter. Indeed, we believe it is equally likely that the centre-left Social Democrats or centre-right Slovenian Democratic Party will lead the next coalition administration.
Slovenia’s balance of payments dynamics indicate that the economy has rebalanced significantly since the onset of the global financial crisis. That said, while macroeconomic risks from external imbalances have mitigated sharply, we caution that the substantial slowdown in foreign lending into the economy will continue to translate into weak real GDP growth. We hold to our core forecast for the current account deficit to widen steadily in the coming years but remain well below the pre-recession average.
Headline inflation is likely to rise through H111, although we maintain that underlying price pressures will stay low. Indeed, while we hold to our forecast for consumer price growth to average 2.1% in 2011, our view is for core inflation to remain below 1.0%. Beyond this year, we expect prices pressures to remain contained as commodity price rises decelerate and domestic demand growth settles at a relatively mild rate of around 3.0%. The report forecasts inflation to average 2.2% over 2012-2015.
Executive Summary
Expect Lower Growth Over Long Term
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Tough Year Ahead For Coalition
A weak economic recovery, continuation of tight credit markets and high unemployment suggest 2011 will be a tough year for Slovenia’s centre-left coalition government
Table: Political Overview
Long-Term Political Outlook
Political Challenges Amid Economic Slowdown
Slovenia will continue to enjoy broad-based political stability over the long term
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Slow Recovery, Lower Trend Growth
Leading indicators through Q410 have reinforced our long-held weak medium-term outlook for the Slovenian economy
Table: ECONOMIC ACTIVITY
Balance of Payments
Weak Foreign Investment Bodes Ill For Recovery
Slovenia’s balance of payments dynamics indicate that the economy has rebalanced significantly since the onset of the global financial crisis
Table: BALANCE OF PAYMENTS
Monetary Policy
Inflation To Rise, But Core To Remain Low
Headline inflation in Slovenia is likely to rise through mid-2011, but we maintain that underlying price pressures will stay low
Table: MONETARY POLICY
Regional Monetary Policy
ECB: Inflation, Monetary Tightening Back In Focus
This year will be pivotal for eurozone monetary policy, with the European Central Bank (ECB) expected to steadily withdraw its extraordinary liquidity support measures ahead of rate normalisation
table: EURO ZONE VAT CHANGES
Regional Outlook
Policy Implications Of Rising Inflation
Rising inflationary pressures are creating policy dilemmas for emerging European central banks
Chapter 3: 10-Year Forecast
The Slovenian Economy To 2020
Convergence To Slow Markedly
We expect Slovenia’s real macroeconomic convergence with western European developed states to continue through our 10-year forecast period, though at a far reduced pace to the decade leading up to 2008
Table: Long-Term Macroeconomic Forecasts
Chapter 4: Business Environment
SWOT Analysis
BMI Business Environment Risk Ratings
Business Environment Outlook
Institutions
Table: BMI Business And Operation Risk Ratings
Table: BMI Legal Framework Rating
Table: Labour Force Quality
Infrastructure
Table: Emerging Europe – Annual FDI Inflows
Market Orientation
Table: Trade And Investment Ratings
Operational Risk
Table: Top Export Destinations
Chapter 5: Key Sectors
Autos
Table: Production
Table: Sales
Table: Trade
Chapter 6: BMI Global Assumptions
Global Outlook
Growth Solidifies, But Inflation Poses A Threat
table: Global Assumptions
TABLE : GLO BAL & RE GIONAL REAL GDP GRO WTH % CHG Y-O-Y
TABLE : CONSENSUS FORECASTS
Chapter 7: Sector Forecast Appendix
Table: Autos Sector Key Indicators
Table: Food and Drink Sector Key Indicators
Table: Infrastructure Sector Key Indicators
Table: Oil and Gas Sector Key Indicators
Table: Ph armaceutical sector Key Indicators
Table: Telecoms Sector Key Indicators
Table: Freight Key Indicators
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