Ljubljana (Slovenia), December 18: Slovenia's economy will expand by 6.7 percent this year, the country's central bank said on Friday, raising its June forecast of a 5.2 percent gross domestic product (GDP) growth.
The Bank of Slovenia also cut the GDP growth forecast for 2022 to four percent from 4.8 percent. The institution expects the country's economy to expand by 3.3 percent in 2023 and 2.6 percent in 2024.
"The macroeconomic forecasts for Slovenia remain favorable. Economic recovery has a broad base, the labor market conditions are encouraging," the bank said in a report, adding that growth will be supported by household spending, investments and exports.
It said that the epidemiological situation remains the main risk to the forecast. "The key risk is the possible emergence of new COVID-19 variants, against which the protection offered by vaccination or previous infection may not be sufficient."
Other risks include imbalances on the global market of raw materials, particularly energy resources, as well as supply chain bottlenecks, the bank said, adding that labor shortage is putting pressure on wages, which could lead to a spiral of higher wages and inflation.
The bank expects inflation to reach 3.8 percent in 2022, up from two percent this year. The rate will then fall to 1.8 percent in 2023.
Exports are projected to increase by 10.8 percent this year and 5.9 percent in 2022, and investments are expected to grow by 13.8 percent in 2021 and 7.6 percent in 2022. Household spending is seen rising by 4.8 percent next year after a growth of 9.6 percent in 2021.
Slovenia, which has a population of 2.1 million, has been badly hit by the COVID-19 pandemic but so far only 55.8 percent of its citizens have been fully vaccinated against the virus. On Tuesday, the country reported its first four cases of the Omicron variant of COVID-19.