Macroeconomic environment
September 1, 2025
Latest data shows modest economic growth continuing, while slow productivity growth is a notable long-term challenge
Economic growth in Slovenia recovered in the second quarter, driven mainly by increased private consumption, and Banka Slovenije expects growth to continue in the third quarter. Inflation rose slightly over the summer, driven by rising food prices and energy prices. The labour market remains robust, despite a fall in employment. The new Review of macroeconomic developments also finds that one of the long-term challenges facing the Slovenian economy is the trend of slowing growth in labour productivity, which is mainly related to the changing structure of the economy and adverse demographic developments.
Current posts
In focus
Sluggish labour productivity growth at the core of the economy’s long-term challenges
In the latest Review of Macroeconomic Developments, we provide an in-depth analysis of the longer-term challenges of the Slovenian economy, focusing on investment and labour productivity. Our findings show that the structure of economic growth has shifted markedly over the past three decades: prior to the global financial and economic crisis, growth was primarily driven by productivity gains, while in the post-crisis period it has relied mainly on employment growth. The trend decline in labour productivity growth raises concerns regarding the long-term sustainability of economic growth.
Investment is a key driver of productivity growth, which in turn depends also on the industrial intensity of the economy, innovation dynamics, and the adoption of new technologies. Data indicate that investment activity in Slovenia remains weak. In corporate spending on machinery and equipment the positive gap vis-à-vis the EU has narrowed significantly, while investment in construction—particularly in residential housing—and in intellectual property products lags behind the EU average, hampering faster economic convergence towards more advanced Member States. Public investment, on the other hand, exceeds the EU average but is heavily influenced by EU funding cycles and domestic electoral dynamics.
In addition to modest investment activity, several other structural challenges are weighing on productivity growth and potential GDP, most notably the changing structure of the economy and adverse demographic trends associated with labour market tightness. The rise in sickness absenteeism is also a source of concern. Persistent uncertainty, declining competitiveness, weak demand, and low capacity utilisation further undermine firms’ investment incentives. This is confirmed by microdata analysis, which shows that corporate investment is highly procyclical, reflecting sensitivity to transitory fluctuations in revenues and uncertainty, with small and export-oriented firms being particularly vulnerable.
Current data
Economic publications
Review of macroeconomic developments and projections June 2025
Research publications
Luka Markovič: Measures of inflation sensitivity to monetary policy
Gašper Ploj: Core inflation in the euro area: What explains the post-pandemic dynamics of services and NEIG inflation?
Luka Žakelj: Situation in energy intensive manufacturing sectors in Slovenia