Recovering from economic recession, Slovenia contemplates regaining its best-performing status

Despite its small size, Slovenia hides big, impressive things inside of it, comprising Alpine mountains, thick forests, historic cities and a piece of Adriatic coastline.

Slovenia had always been the most prosperous region of the former Yugoslavia and found the transition from a state economy to the free market easier than most.

Slovenia was the first former Yugoslav republic to join the European Union, in May 2004 – a few months after joining NATO. On 1 January 2007, it became the first of the new EU member states to join the Eurozone, while a year later, it became the first former communist state to take on the EU presidency.

With excellent infrastructure, a well-educated work force, and a strategic location between the Balkans and Western Europe used to have one of the highest per capita GDPs in Central Europe.

Almost two-thirds of people are employed in services, and over one-third in industry and construction. The main industries are motor vehicles, electric and electronic equipment, machinery, pharmaceuticals and fuels.

It actually enjoyed substantial economic and political stability after gaining independence from Yugoslavia and it was considered one of the best-performing new EU members. Yet, economic recession had its say here, too, prompting the government to herald tough austerity measures, which naturally also sparked mass protests. The public debt rose to 30 billion euros, or 80.9 percent of GDP, in 2014 from 21.6 percent in 2008, as the export-oriented country was badly hit by the global crisis. The government also poured more than 3 billion euros of its own funds into local banks to rescue them in 2013.

Slovenia narrowly avoided an international bailout because of its debt-laden banks in 2013. From this year to 2017, Slovenia will have to pay about 1 billion euros a year in interest on its debt. That equals about 13 percent of annual budget revenues. The government expects debt to rise to some 81.6 percent of GDP this year, then fall from 2016 on, according to a Reuters report.

Economic reforms have helped Slovenia recover from the crisis, with the government expecting the economy to expand by 2.4 percent this year versus growth of 2.6 percent in 2014, mainly on account of an expected smaller increase in exports.

However, further action is needed to strengthen the banking and corporate sectors, stabilize debt and create jobs, according to the latest OECD Economic Survey of Slovenia.

Some of the problems are the population ageing and the pensions system. Last year, Slovenia spent almost 5 billion euros on pensions, up from 3.5 billion euros a decade before, mainly because of its rapidly ageing population.

In 2013, the country enforced a pension reform that will gradually raise the retirement age to 65, from 59 now. The Organization for Economic Cooperation and Development, however, said that was not enough to make the system sustainable.

At the same time, the European Commission’s deputy president Valdis Dombrovskis said in early June that pursuing privatization would boost Slovenia’s economy, urging the country to sell all 15 firms it said it would privatize in 2013.

G from geography and green

Slovenia is located in Central and Southeastern Europe touching the Alps and bordering the Mediterranean. Over half of the country (10,124 km² or 3,909 sq mi) is covered by forests. This makes Slovenia the third most forested country in Europe, after Finland and Sweden, which could practically make green a national color.

But Slovenia is also a land of water. The total length of its watercourses, including rivers and streams (permanent and torrential), is 26,600 km. In terms of the total quantity of fluvial water per inhabitant, Slovenia is one of the richest countries in Europe, with a figure almost four times higher than the European average.

In Slovenia, the sun shines approximately 2,000 hours per year. And there is plenty of snow in winter, which makes a perfect travel destination. The highest mountain is called Triglav – the name meaning “three-heads” – and it is 2,864m high. The mountain is a true national symbol, featured on the national coat of arms and the flag. The largest area of protected nature is the Triglav National Park (83,807 hectares).

Unspoilt nature is one of Slovenia’s most important “draws”, enabling leisure activities, recreation and eco tourism.

Tourism and catering generate 12% of GDP in Slovenia and create approximately 8% of jobs (52,000). In tourist areas this proportion is significantly higher. Forecast tourism growth for Slovenia up to 2020 is 6% (STB figures). Tourism represents 10% of Slovenia’s exports of goods and services, compared to a EU average of 30%.