Economy of Slovenia

Slovenia today enjoys both a prosperity and stability, as well as a GDP per capita substantially higher than that of the other transitioning economies of Central Europe. Although it comprised only about one-thirteenth of Yugoslavia's total population, it was the most productive of the Yugoslav republics, accounting for one-fifth of its GDP and one-third of its exports. It thus gained independence in 1991 with an already relatively prosperous economic and strong market ties to the West. Since that time, it has pursued diversification of its trade toward the West and integration into Western and transatlantic institutions vigorously. Slovenia is a founding member of the World Trade Organization, joined CEFTA in 1996, and joined the European Union on May 1, 2004. Slovenia also participates in SECI (Southeast European Cooperation Initiative), as well as in the Central European Initiative, the Royaumont Process, and the Black Sea Economic Council.

Today, Slovenia is the most prosperous country of transition Europe and well-poised to join the mainstream of modern industrial economies. It benefits from a well-educated and productive work force, and its political and economic institutions are vigorous and effective. Its per capita income is now 84% of the EU average. Although Slovenia has taken a cautious, deliberate approach to economic management and reform, with heavy emphasis on achieving consensus before proceeding, its overall record is one of success. The current account deficit began in 1998 (-US$147.2 million), deepened in 1999 to -$782.6 million, and improved slightly in 2000 on stronger exports to -$594.2 million. In 2000, Slovenia's economic growth reached 4.8 % (2000), annual inflation, 9.2 % (2000), and the debt to GDP ratio was well within Maastricht parameters. Due to its macroeconomic stability, favourable foreign debt position, and obvious interest in EU membership, Slovenia consistently receives the highest credit rating of all transition economies.

Slovenia's trade is orientated towards Western (EU) countries, mainly Germany, Austria, Italy, and France. This is the result of a wholesale reorientation of trade toward the West and the growing markets of central and eastern Europe in the face of the collapse of its Yugoslav markets. Slovenia's economy is highly dependent on foreign trade. Trade equals about 120 % of GDP (exports and imports combined). About two-thirds of Slovenia's trade is with EU members, a primary motivation for seeking EU membership. This high level of openness makes it extremely sensitive to economic conditions in its main trading partners and changes in its international price competitiveness. However, despite the economic slowdown in Europe in 2001-03, Slovenia maintained 3 % GDP growth. Keeping labour costs in line with productivity is thus a key challenge for Slovenia's economic well-being, and Slovenian firms have responded by specializing in mid- to high-tech manufactures. Industry and construction comprise over one-third of GDP. As in most industrial economies, services make up an increasing share of output (60.1 %), notably in financial services.

Agriculture, forestry, and fishing is a comparatively low 2% of GDP and engages only 6% of the population. The average farm is only 5.5 hectares. Part of Slovenia lies in the Alpe-Adria bioregion, which is currently involved in a major initiative in organic farming. Between 1998 and 2003, the organic sector grew from less than 0.1% of Slovenian agriculture to roughly the European Union average of 3.3%. [1] (http://www.foodfirst.org/pubs/backgrdrs/2004/s04v10n3.html)

Economic management in Slovenia is relatively good. Public finances have shown recently so far modest deficits on the order of 1.2 % of GDP through 1999. Reversal of this trend will depend primarily on the government reversing the explosive growth in pension expenditures. Other accounts are fairly robust: Slovenia has an increasing current account deficit, declining from a balance in 1997 to -$594.2 million in 2000. While the authorities have been successful in stabilizing the Slovenian tolar and bringing inflation down from more than 200 % in 1992 to an estimated 9.2 % in 2000, inflation edged up from 1999 with the introduction of a value-added tax.

Slovenia's continued success will hinge mainly on the success of fiscal reform, wage restraint, and its ability to truly open its economy. A backlog of reform legislation has been building, and passage of important measures to restructure the economy has been slow. This situation is starkest in the area of foreign direct investment, where not only foreign capital but international best practices and modern technology are at stake. Slovenia's traditional anti-inflation policy relied heavily on capital inflow restrictions. Its slow privatization process favoured insider purchasers and prescribed long lag time on share trading, complicated by a cultural wariness of being "bought up" by foreigners. As such, Slovenia has had a number of impediments to full foreign participation in its economy. Slovenia has garnered some notable foreign investments, including United States investments of $125 million by Goodyear in 1997 and by Western Wireless International planned for US$150-$200 million over 4 years beginning in 2000.

GDP: purchasing power parity - $37.06 * 10¹² (2002 est.)

GDP - real growth rate: 3.2 % (2002 est.)

GDP - per capita: purchasing power parity - $19,200 (2002 est.)

GDP - composition by sector:
agriculture: 3.2 %
industry: 36.3 %
services: 60.5 % (2001 est.)

Population below poverty line: N/A

Household income or consumption by percentage share:
lowest 10 %: 3.9 %
highest 10 %: 23 % (1998)

Distribution of family income - Gini index: 28.4 (1998)

Inflation rate (consumer prices): 7.4 % (2002 est.)

Labour force: 857,400

Unemployment rate: 11 % (2002 est.)

Budget:
revenues: $8.11 * 10¹²
expenditures: $8.32 * 10¹² (1997 est.)

Industries: ferrous metallurgy and rolling mill products, aluminium reduction and rolled products, lead and zinc smelting, electronics (including military electronics), trucks, electric power equipment, wood products, textiles, chemicals, machine tools

Industrial production growth rate: 2.4 % (2002)

Electricity - production: 13.69 * 10¹² kWh (2002)

Electricity - production by source:
fossil fuel: 35.2 %
hydro: 27.3 %
nuclear: 36.8 %
other: 0.7% (2001)

Electricity - consumption: 13.81 * 10¹² kWh (2001)

Electricity - exports: 3 * 10¹² kWh (2001)

Electricity - imports: 700 GWh (2000)

Oil - production: 20 barrels/day (2001 est.)

Oil - consumption: 53,300 barrels/day (2001 est.)

Natural gas - consumption: 1.04 * 10¹² m³ (2001 est.)

Natural gas - imports: 1.04 * 10¹² m³ (2001 est.)

Agriculture - products: potatoes, hops, wheat, sugar beets, corn, grapes; cattle, sheep, poultry

Exports: $10.4 * 10¹² f.o.b. (2002)

Exports - commodities: manufactured goods, machinery and transport equipment, chemicals, food

Exports - partners: Germany 23.9 %, Italy 12.7 %, Austria 9.5 %, Croatia 8 %, France 7.4 %, Bosnia and Herzegovina 4.4 % (2002)

Imports: $11.1 * 10¹² f.o.b. (2002)

Imports - commodities: machinery and transport equipment, manufactured goods, chemicals, fuels and lubricants, food

Imports - partners: Germany 20 %, Italy 19 %, Austria 11.3 %, France 10.5 % (2002)

Debt - external: $7.9 * 10¹² (2001)

Economic aid - recipient: ODA, $62 million (2000 est.)

Currency: 1 tolar (SIT) = 100 stotins

Exchange rates: tolars (SIT) per US$1 - 240.25 (2002), 242.75 (2001), 222.66 (2000), 181.77 (1999), 166.13 (1998), 159.69 (1997), 135.36 (1996), 118.52 (1995)

Fiscal year: calendar year

See also

• Economy of Europe
• Slovenia

es:Economía de Eslovenia