The Bank of Slovenia downgraded its GDP growth forecast by 0.2pps to 3.2% in 2019, the Slovenian news agency reported on Wednesday. GDP growth is then expected to decelerate to 2.9% in each 2020 and 2021. The moderation will be attributed to slightly lower external demand and a gradual transition to a more mature period of the economic cycle, the bank argued, adding that downward risks are more pronounces due to external factors.
Growth will continue to be underpinned by private spending and investments. The former is expected to rise by 3.0% in 2019 and by 2.9% in 2020, which is higher than in the past two years, the CB noted. Investments are projected to expand by 6.5% in 2019 and by 6.0% in 2020, down from double-digit rates registered in the last two years. On the other hand, export growth will be surpassed by import growth and will not contribute to GDP growth on a net basis in neither 2019, nor in 2020. The central bank also forecasts that wages will continue growing and eventually undermine the cost competitiveness of the economy. As a result, businesses will need to invest in transitioning to higher value-added, which will be partially supported by bank lending as interest rates remain low.