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Home > Country Profiles > Slovenia

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Financial Outlook

The Slovenian economy contracted by 1.7% in 2013 and by the end of the year had declined for eight consecutive quarters, having shrunk by 1.7% in 2012, according to an IMF report published in January 2014. The organization forecast that the economy would expand by 1.1% in 2014. A sharp contraction in investment was the main driver of the downturn in the early stages, while deep fiscal cuts, stagnant wages, and growing uncertainty subsequently weighed on domestic consumption. However, the current account moved into a substantial surplus as imports fell. The IMF stated that by mid-2013 real GDP had fallen by 11% from its pre-crisis peak, the largest output loss among Eurozone members after Greece. Nonperforming loans have also weighed heavily on the banking sector, and in December 2013 the authorities warned that the ailing banking sector needs to raise reserves by €4.8 billion to meet capital targets, raising concerns that the country might need an EU bailout. The government said that Slovenian banks had an estimated €8 billion in bad loans—more than one-fifth of national output. The central bank said that it planned to impose 100% losses on junior bondholders to gather in some €440 million.

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Further reading on Slovenia

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