Slovenia: More competition needed
Economic activity is likely to slow significantly in 2009, driven in particular by a sharp deceleration in investment in construction. The following year, economic growth should return toward trend as both fixed investment and private consumption recover. Headline inflation is expected to subside due to falling commodity prices, although planned public wage increases will exert upward pressure on core inflation.
With European Central Bank monetary policy likely to remain accommodating for Slovenia during the projection period, the fiscal policy stance should remain at least neutral to avoid adding to inflationary pressures. Competition in product markets needs to be nurtured to help reduce prices and improve productivity.