LJUBLJANA: Slovenia's economy will expand by 3.2pc this year versus 4.5pc in 2018, the Bank of Slovenia said in a report on Wednesday, cutting its earlier forecast for 2019 by 0.2 percentage points mainly due to expected lower foreign demand.
It forecast both 2020, and 2021, GDP growth would be 2.9pc.
The bank sees annual inflation at 1.7pc this year, down from 2.2pc in its December forecasts, and at 2pc in 2020 and 2021.
Annual inflation was 1.9pc in 2018.
"There are risks that could further weaken economic growth and they mostly come from external environment," the central bank said, referring to trade conflicts that could ease demand for Slovenian products.
Slovenia exports about 80pc of its production, mainly to other European Union states. Main exports include cars, car parts, pharmaceutical products and household appliances.
The bank said economic growth will be boosted by household spending and investments. Household spending is seen up by 2.9pc this year after the government raised most public sector wages by at least 4pc in January.
Investment will rise by 6.5pc this year while exports will increase by 5.5pc and imports 6.2pc, it predicted.
"Risk in domestic environment are positive as possible faster increase of wages (than expected) could further strengthen household spending," the bank said, adding that possible faster inflow of European funds could give an additional boost to investment.
On the other hand wage pressures at home and global movements of oil prices could push inflation above forecast, the central bank said.
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