Slovenia Outlook | Domestic demand support to offset external environment headwinds
CEE Macro Outlook , 14. März
4Q24 GDP slightly exceed our expectations, with headline figure delivering solid 1.5% y/y growth, thus wrapping up FY24 GDP performance at 1.6%, GDP – structure wise, we saw strongest support from the private and public consumption, while investments and net exports were drag on the overall FY24 performance. Outlook for the 2025 envisages similar picture, with domestic demand expected to remain pivotal growth engine, while challenges regarding the external demand developments imply less supportive net exports contribution ahead. We see GDP gradually accelerating towards 2.0-2.5% band during 2025-26 period, with risks remaining present and linked to increased uncertainty in external environment.
Following average CPI performance of 2.0% in 2024, headline figure is seen landing at more elevated level around 2.4% in 2025, where phase-out of support measures to mitigate energy sector volatility, coupled with the base effect and ongoing pressures from the services side would shape inflation dynamics. Steady economic performance and fewer than initially planed one-off measures suggest 2024 budget deficit at similar levels as seen in 2023 i.e. around 2.5% of GDP, implying no deviation from the consolidation path – fiscal position is expected to remain overall stable, with execution in 2025-26 period remaining on the right tracks. On the financing side, Slovenia remains in a comfortable position by securing already around 25% of the 2025’s funding needs, as it successfully tapped the bond market at the start of the year (issuing EUR 1bn in a new 30Y long tenor).
Following average CPI performance of 2.0% in 2024, headline figure is seen landing at more elevated level around 2.4% in 2025, where phase-out of support measures to mitigate energy sector volatility, coupled with the base effect and ongoing pressures from the services side would shape inflation dynamics. Steady economic performance and fewer than initially planed one-off measures suggest 2024 budget deficit at similar levels as seen in 2023 i.e. around 2.5% of GDP, implying no deviation from the consolidation path – fiscal position is expected to remain overall stable, with execution in 2025-26 period remaining on the right tracks. On the financing side, Slovenia remains in a comfortable position by securing already around 25% of the 2025’s funding needs, as it successfully tapped the bond market at the start of the year (issuing EUR 1bn in a new 30Y long tenor).