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IMAD Leaves Growth Estimate Unchanged, Allows for Alternatives

The Institute for Macroeconomic Analyses and Development (IMAD) has retained its economic growth forecast for the year at 3.6 percent, although analysts allow for two alternative scenarios - one with lower growth, and another with stronger growth

Presenting IMAD's spring report on Friday, 11 June, Mojca Vendramin, the editor of the report, said that the lower growth scenario is based on weaker economic competitiveness than expected. This would mean that Slovenia's economic growth would amount to 2.8 percent, 0.8 percentage points less than the forecast.
The other scenario, said Vendramin, takes into account a strong surge in domestic spending, whereby economic growth would jump to 4.1 percent, while inflation would also be pushed upwards as a result.
The first scenario would see Slovenian exports growth by 4.1 percent instead of the 5.5 percent forecast by IMAD. The second, meanwhile, would see inflation 0.2 percentage points higher than the current forecast at 3.4 percent.
IMAD analysts point out in the report that a global economic recovery was underway in the second half of last year. The trend continued in the first quarter of this year. This should have a positive impact on Slovenian exports.
Growth in Slovenia's most important trading partner, the EU, is to amount to around 1.9 percent, IMAD predicts, with growth slightly lower in Germany, Austria and France, which are the most important markets for Slovenian products.
IMAD believes that Slovenian exports will grow by 5.5 percent this year and 6 percent next year. Exports to EU countries are to jump as a result of Slovenia's accession to the block and will thus represent 70 percent of all Slovenian exports - last year that figure stood at 60 percent, the report points out.
Domestic spending is expected to expand by 3.4 percent this year and 3.5 percent next year, the report adds.
MAD expects to see no major changes on the labour front, with unemployment expected to remain at current levels of 6.7 percent (measured by ILO standards), or a touch lower, in the next year.
IMAD's economic growth forecast predicts a 3.6-percent rate of expansion this year and 3.7-percent next year.

Source: Slovene Press Agency

More in Slovenia Business Week no. 24/2004

Author: Branka Murn