The Economy of Slovenia
Slovenia has a developed economy and is the richest Slavic country by GDP per capita. Slovenia is also among the top global economies in terms of human capital. It is the most developed transition country with an old mining-industrial tradition, chemical industry, and developed service activities. Slovenia was in the beginning of 2007 the first new member to introduce the euro as its currency, replacing the tolar. Since 2010, it has been member of the Organisation for Economic Co-operation and Development. There is a big difference in prosperity between the various regions. The economically wealthiest regions are the Central Slovenia region, which includes the capital Ljubljana and the western Slovenian regions (the Gorizia and Coastal–Karst Statistical Regions), while the least wealthy regions are the Mura, Central Sava, and Littoral–Inner Carniola Statistical Regions.
In 2004–06, the economy grew on average by nearly 5% a year in Slovenia; in 2007, it expanded by almost 7%. The growth surge was fuelled by debt, particularly among firms, and especially in construction. The financial crisis of 2007–2010 and European sovereign-debt crisis had a significant impact on the domestic economy. The construction industry was severely hit in 2010 and 2011.
In 2009, Slovenian GDP per capita shrank by 8%, the biggest decline in the European Union after the Baltic countries and Finland. An increasing burden for the Slovenian economy has been its rapidly aging population.
In August 2012, the year-on-year contraction was 0.8%; however, 0.2% growth was recorded in the first quarter (in relation to the quarter before, after data was adjusted according to season and working days). Year-on-year contraction has been attributed to the fall in domestic consumption and the slowdown in export growth. The decrease in domestic consumption has been attributed to the fiscal austerity, to the freeze on budget expenditure in the final months of 2011, to the failure of the efforts to implement economic reforms, to inappropriate financing, and to the decrease in exports.
Due to the effects of the crisis, it was expected that several banks had to be bailed out by EU funds in 2013; however, needed capital was able to be covered by the country's own funds. Fiscal actions and legislations aiming on the reduction of spendings as well as several privatisations supported an economic recovery as from 2014. The real economic growth rate was at 2.5% in 2016 and accelerated to 5% in 2017. The construction sector has seen a recent increase, and the tourism industry is expected to have continuous rising numbers.
Slovenia's total national debt rose substantially during the Great Recession and was decreasing as of 2019; at the end of 2018 amounted to 32,223 million euros, 70% of the GDP.
Almost two-thirds of people are employed in services, and over one-third in industry and construction. Slovenia benefits from a well-educated workforce, well-developed infrastructure, and its location at the crossroads of major trade routes.
The level of foreign direct investment (FDI) per capita in Slovenia is one of the lowest in the EU, and the labor productivity and the competitiveness of the Slovenian economy is still significantly below the EU average. Taxes are relatively high, the labor market is seen by business interests as being inflexible, and industries are losing sales to China, India, and elsewhere.
High level of openness makes Slovenia extremely sensitive to economic conditions in its main trading partners and changes in its international price competitiveness. The main industries are motor vehicles, electric and electronic equipment, machinery, pharmaceuticals, and fuels. Examples of major Slovenian companies operating in Slovenia include the home appliance manufacturer Gorenje, the pharmaceutical companies Krka and Lek (Novartis' subsidiary), the oil distributing company Petrol Group, energy distribution companys GEN, GEN-I, HSE and Revoz, a manufacturing subsidiary of Renault.
In 2018, the net energy production was 12,262 GWh and consumption was 14,501 GWh. Hydroelectric plants produced 4,421 GWh, thermal plants produced 4,049 GWh, and the Krško Nuclear Power Plant produced 2,742 GWh (50% share that goes to Slovenia; other 50% goes to Croatia due to joint ownership). Domestic electricity consumption was covered 84.6% by domestic production; percentage is decreasing from year to year meaning Slovenia is more and more depending on electricity import.
A new 600 MW block of Šoštanj thermal power plant finished construction and went online in the autumn of 2014.[169] The new 39.5 MW HE Krško hydro power plant was finished in 2013, and has since been the largest sole energy producer, accounting for of the gross energy production in 2018. The 41.5 MW HE Brežice and 30.5 MW HE Mokrice hydro power plants were built on the Sava River in 2018 and the construction of ten more hydropower plants with a cumulative capacity of 338 MW is planned to be finished by 2030. A large pumped-storage hydro power plant Kozjak on the Drava River is in the planning stage.
At the end of 2018, at least 295 MWp of photovoltaic modules and 31,4 MW of biogas powerplants were installed. Compared to 2017, renewable energy sources contributed 5,6 percentage points more into whole energy consumption. There is interest to add more production in the area of solar and wind energy sources (subsidising schemes are increasing economic feasibility), but microlocation settlement procedures take enormous toll on the efficiency of this intitiatve (nature preservation vs. energy production facilities dilemma).
Most of foreign tourists to Slovenia come from the key European markets: Italy, Austria, Germany, Croatia, Benelux, Serbia, Russia and Ukraine, followed by UK and Ireland. European tourists create more than 90% of Slovenia's tourist income. In 2016, Slovenia was declared the world's first green country by the Netherlands-based organization Green Destinations. On being declared the most sustainable country in 2016, Slovenia had a big part to play at the ITB Berlin to promote sustainable tourism.
Since Antiquity, geography has dictated transport routes in Slovenia. Significant mountain ranges, major rivers and proximity to the Danube played roles in the development of the area's transportation corridors. One recent particular advantage are the Pan-European transport corridors V (the fastest link between the North Adriatic, and Central and Eastern Europe) and X (linking Central Europe with the Balkans). This gives it a special position in the European social, economic and cultural integration and restructuring.
The road freight and passenger transport constitutes the largest part of transport in Slovenia at 80%. Personal cars are much more popular than public road passenger transport, which has significantly declined. Slovenia has a very high highway and motorway density compared to the European Union average. The highway system, the construction of which was accelerated after 1994, has slowly but steadily transformed Slovenia into a large conurbation. Other state roads have been rapidly deteriorating because of neglect and the overall increase in traffic.
The existing Slovenian railways are out-of-date and have difficulty competing with the motorway network; partially also as a result of dispersed population settlement. Due to this fact and the projected increase in traffic through the port of Koper, which is primarily by train, a second rail on the Koper-Divača route is in early stages of starting construction. With a lack of financial assets, maintenance and modernisation of the Slovenian railway network have been neglected. Due to the out-of-date infrastructure, the share of the railway freight transport has been in decline in Slovenia. The railway passenger transport has been recovering after a large drop in the 1990s. The Pan-European railway corridors V and X, and several other major European rail lines intersect in Slovenia.
The major Slovenian port is the Port of Koper. It is the largest Northern Adriatic port in terms of container transport, with almost 590,000 TEUs annually and lines to all major world ports. It is much closer to destinations east of the Suez than the ports of Northern Europe. In addition, the maritime passenger traffic mostly takes place in Koper. Two smaller ports used for the international passenger transport as well as cargo transport are located in Izola and Piran. Passenger transport mainly takes place with Italy and Croatia. Splošna plovba, the only Slovenian shipping company, transports freight and is active only in foreign ports.
Air transport in Slovenia is quite low, but has significantly grown since 1991. Of the three international airports in Slovenia, Ljubljana Jože Pučnik Airport in central Slovenia is the busiest, with connections to many major European destinations. The Maribor Edvard Rusjan Airport is located in the eastern part of the country and the Portorož Airport in the western part. The state-owned Adria Airways is the largest Slovenian airline; however in 2019 it declared bankruptcy and ceased operations. Since 2003, several new carriers have entered the market, mainly low-cost airlines. The only Slovenian military airport is the Cerklje ob Krki Air Base in the southwestern part of the country. There are also 12 public airports in Slovenia.
In 2004–06, the economy grew on average by nearly 5% a year in Slovenia; in 2007, it expanded by almost 7%. The growth surge was fuelled by debt, particularly among firms, and especially in construction. The financial crisis of 2007–2010 and European sovereign-debt crisis had a significant impact on the domestic economy. The construction industry was severely hit in 2010 and 2011.
In 2009, Slovenian GDP per capita shrank by 8%, the biggest decline in the European Union after the Baltic countries and Finland. An increasing burden for the Slovenian economy has been its rapidly aging population.
In August 2012, the year-on-year contraction was 0.8%; however, 0.2% growth was recorded in the first quarter (in relation to the quarter before, after data was adjusted according to season and working days). Year-on-year contraction has been attributed to the fall in domestic consumption and the slowdown in export growth. The decrease in domestic consumption has been attributed to the fiscal austerity, to the freeze on budget expenditure in the final months of 2011, to the failure of the efforts to implement economic reforms, to inappropriate financing, and to the decrease in exports.
Due to the effects of the crisis, it was expected that several banks had to be bailed out by EU funds in 2013; however, needed capital was able to be covered by the country's own funds. Fiscal actions and legislations aiming on the reduction of spendings as well as several privatisations supported an economic recovery as from 2014. The real economic growth rate was at 2.5% in 2016 and accelerated to 5% in 2017. The construction sector has seen a recent increase, and the tourism industry is expected to have continuous rising numbers.
Slovenia's total national debt rose substantially during the Great Recession and was decreasing as of 2019; at the end of 2018 amounted to 32,223 million euros, 70% of the GDP.
Almost two-thirds of people are employed in services, and over one-third in industry and construction. Slovenia benefits from a well-educated workforce, well-developed infrastructure, and its location at the crossroads of major trade routes.
The level of foreign direct investment (FDI) per capita in Slovenia is one of the lowest in the EU, and the labor productivity and the competitiveness of the Slovenian economy is still significantly below the EU average. Taxes are relatively high, the labor market is seen by business interests as being inflexible, and industries are losing sales to China, India, and elsewhere.
High level of openness makes Slovenia extremely sensitive to economic conditions in its main trading partners and changes in its international price competitiveness. The main industries are motor vehicles, electric and electronic equipment, machinery, pharmaceuticals, and fuels. Examples of major Slovenian companies operating in Slovenia include the home appliance manufacturer Gorenje, the pharmaceutical companies Krka and Lek (Novartis' subsidiary), the oil distributing company Petrol Group, energy distribution companys GEN, GEN-I, HSE and Revoz, a manufacturing subsidiary of Renault.
In 2018, the net energy production was 12,262 GWh and consumption was 14,501 GWh. Hydroelectric plants produced 4,421 GWh, thermal plants produced 4,049 GWh, and the Krško Nuclear Power Plant produced 2,742 GWh (50% share that goes to Slovenia; other 50% goes to Croatia due to joint ownership). Domestic electricity consumption was covered 84.6% by domestic production; percentage is decreasing from year to year meaning Slovenia is more and more depending on electricity import.
A new 600 MW block of Šoštanj thermal power plant finished construction and went online in the autumn of 2014.[169] The new 39.5 MW HE Krško hydro power plant was finished in 2013, and has since been the largest sole energy producer, accounting for of the gross energy production in 2018. The 41.5 MW HE Brežice and 30.5 MW HE Mokrice hydro power plants were built on the Sava River in 2018 and the construction of ten more hydropower plants with a cumulative capacity of 338 MW is planned to be finished by 2030. A large pumped-storage hydro power plant Kozjak on the Drava River is in the planning stage.
At the end of 2018, at least 295 MWp of photovoltaic modules and 31,4 MW of biogas powerplants were installed. Compared to 2017, renewable energy sources contributed 5,6 percentage points more into whole energy consumption. There is interest to add more production in the area of solar and wind energy sources (subsidising schemes are increasing economic feasibility), but microlocation settlement procedures take enormous toll on the efficiency of this intitiatve (nature preservation vs. energy production facilities dilemma).
Most of foreign tourists to Slovenia come from the key European markets: Italy, Austria, Germany, Croatia, Benelux, Serbia, Russia and Ukraine, followed by UK and Ireland. European tourists create more than 90% of Slovenia's tourist income. In 2016, Slovenia was declared the world's first green country by the Netherlands-based organization Green Destinations. On being declared the most sustainable country in 2016, Slovenia had a big part to play at the ITB Berlin to promote sustainable tourism.
Since Antiquity, geography has dictated transport routes in Slovenia. Significant mountain ranges, major rivers and proximity to the Danube played roles in the development of the area's transportation corridors. One recent particular advantage are the Pan-European transport corridors V (the fastest link between the North Adriatic, and Central and Eastern Europe) and X (linking Central Europe with the Balkans). This gives it a special position in the European social, economic and cultural integration and restructuring.
The road freight and passenger transport constitutes the largest part of transport in Slovenia at 80%. Personal cars are much more popular than public road passenger transport, which has significantly declined. Slovenia has a very high highway and motorway density compared to the European Union average. The highway system, the construction of which was accelerated after 1994, has slowly but steadily transformed Slovenia into a large conurbation. Other state roads have been rapidly deteriorating because of neglect and the overall increase in traffic.
The existing Slovenian railways are out-of-date and have difficulty competing with the motorway network; partially also as a result of dispersed population settlement. Due to this fact and the projected increase in traffic through the port of Koper, which is primarily by train, a second rail on the Koper-Divača route is in early stages of starting construction. With a lack of financial assets, maintenance and modernisation of the Slovenian railway network have been neglected. Due to the out-of-date infrastructure, the share of the railway freight transport has been in decline in Slovenia. The railway passenger transport has been recovering after a large drop in the 1990s. The Pan-European railway corridors V and X, and several other major European rail lines intersect in Slovenia.
The major Slovenian port is the Port of Koper. It is the largest Northern Adriatic port in terms of container transport, with almost 590,000 TEUs annually and lines to all major world ports. It is much closer to destinations east of the Suez than the ports of Northern Europe. In addition, the maritime passenger traffic mostly takes place in Koper. Two smaller ports used for the international passenger transport as well as cargo transport are located in Izola and Piran. Passenger transport mainly takes place with Italy and Croatia. Splošna plovba, the only Slovenian shipping company, transports freight and is active only in foreign ports.
Air transport in Slovenia is quite low, but has significantly grown since 1991. Of the three international airports in Slovenia, Ljubljana Jože Pučnik Airport in central Slovenia is the busiest, with connections to many major European destinations. The Maribor Edvard Rusjan Airport is located in the eastern part of the country and the Portorož Airport in the western part. The state-owned Adria Airways is the largest Slovenian airline; however in 2019 it declared bankruptcy and ceased operations. Since 2003, several new carriers have entered the market, mainly low-cost airlines. The only Slovenian military airport is the Cerklje ob Krki Air Base in the southwestern part of the country. There are also 12 public airports in Slovenia.
