Country Economic Forecasts > Slovenia

Quarterly GDP growth in Q2 was 0.5%, driven by a strong 1% rise in private consumption and a 1.8% bounce in fixed investment. The latter recovered from a sharp 3.9% drop in Q1, the result of a halt in the drawdown of EU funding. We still see GDP growth at 1.9% in 2016, supported mostly by solid domestic demand. Household spending remains on its path of gradual recovery; we see it rising 2.1% this year, boosted by an improving labour market, continuing deflation and a steady strengthening of the housing market. But with inflation set to jump to 1.5% in 2017 due to energy price base effects, we see consumption growth softening slightly to 2% in 2017. Together with the expected impact of the Brexit vote, this has led us to cut our 2017 growth forecast for Slovenia from 2.5% to 2%. This is not due to direct linkages with the UK, but the result of a downgrade of our 2017 Eurozone growth projection on the back of Brexit-related uncertainties. However, we see growth picking up to just under 3% a year in 2018-19 on the back of improved domestic demand and solid export growth.