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OECD upgrades Slovenia growth outlook (adds)

Paris, 28 November (STA) - The Organisation for Economic Cooperation and Development (OECD) has upgraded its economic growth forecast for Slovenia to 2% for this year and 2.4% for 2017, an improvement of 0.5 and 0.1 percentage points from its June projections.


Slovenia's economic growth this year and next is thus expected to be above the OECD average, while in 2018 it is projected at the average of 2.3%.

In its latest Global Economic Outlook, released on Monday, the OECD also projected a continued decline in Slovenia's joblessness. Survey employment is expected to fall from 7.8% this year to 7.1% next year and to 6.9% in 2018.

In its June outlook, the OECD projected for Slovenia's unemployment to fall from 9% in 2015 to 8.7% this year and to 8.2% the next.

The general government deficit is forecast to fall this year to 2.4% of GDP, and then drop further down next year to 1.6% and in 2018 to 0.9% of GDP.

The OECD expects "private consumption to accelerate on the back of employment gains and faster real wage growth. Investment will pick up as renewed EU structural funds bolster infrastructure investments, firms react to capacity constraints, and housing construction responds to higher property prices."

Inflation is expected to increase as economic slack disappears during 2018 and the OECD finds that fiscal tightening may be needed to prevent inflationary pressures.

As the labour market tightens, OECD sees greater need for reforms to get the long-term unemployed back to work and improve labour force mobility. The organisation also advises shifting some spending on the unemployed in favour of training rather than passive income support.

The latest growth forecast for Slovenia is a bit less upbeat than the one released by the European Commission earlier this month. Brussels expects Slovenia's growth to gain speed from 2.2% this year to 2.6% in 2017 before it slows down back to 2.2% in 2018.