Hermine Vidovic on Slovenia: first signs of recovery

17 July 2014

The wiiw economist gave a radio interview about economic policy priorities after the recent parliamentary elections in Slovenia and positive signs of the country’s economic recovery.

After several years of stagnation and recession, Slovenia experienced a GDP growth of 1.9% in the first quarter of 2014 .

Based on the results for the first months of the year, Hermine Vidovic revised her economic forecast for Slovenia’s GDP growth for 2014 from minus 0.5% to plus 0.5%. According to her, growth will be driven primarily by foreign demand while household consumption will be hampered by high unemployment and the deleveraging process of enterprises. She expects the modest growth to accelerate somewhat in 2015 and 2016. This is assumed to happen as a result of rising foreign demand and a moderate revival of domestic demand.

As for the new government, Hermine Vidovic sees a continuation of the consolidation path pursued by the previous government of utmost importance for the country: ‘Miro Cerar needs to build on the financial market’s relative confidence in the country.’ Having avoided an international bailout last December, ‘Slovenia succeeded within a couple of months to push the yields for 10-year government bonds down from close to 7.0 to 3.3 per cent. Cerar should not gamble away this confidence.’

With regard to the highly unpopular privatisation agenda in Slovenia, Hermine Vidovic sees no way around that task: ‘Privatisations have always been a sensitive issue in Slovenia. It is actually the only new Member State that has not undertaken comprehensive privatisation programmes. However, sooner or later Miro Cerar will have to implement them, because they are essential for budget consolidation.’

The interview was conducted by radio journalist Paul Schiefer (in German language) on 14 July 2014.