The main focus of discussion at the annual meetings of the World Bank Group and the IMF, which are taking place in Washington, D.C. this week, is the global economic situation. This is largely being conditioned by geopolitical tensions, military conflicts, and obstacles to international trade, the last of which are primarily due to measures by the US administration. In the euro area, which is also seeing increased political uncertainty, the economic situation in recent months has also been shaped by the tariff agreement with the US. Given the heightened economic uncertainty, the IMF’s latest projections are forecasting global economic growth to remain sluggish, with no change to the outlook from the previous projections.
The discussions at the meetings concluded that the economic uncertainty is persisting. The global economy is being hit by geopolitical tensions, military conflicts, and difficulties in global trade that are largely a consequence of measures by the US administration. Parts of the euro area are also facing increased political uncertainty, although the economic situation in recent months has come under greater influence from the tariff agreement with the US, which is reducing the uncertainty, but is also now revealing the first negative traces of its direct impact on the European economy.
Under these circumstances the IMF is forecasting global economic growth to remain subdued in 2025 and 2026, but also assesses that the uncertainty associated with global trade will diminish slightly in other parts of the world. The IMF’s latest global economic growth forecasts were consequently unchanged from the July forecasts. The projections also reiterate the importance of economic policymakers working to restore confidence and the predictability and transparency of economic policy.
The IMF is forecasting lower economic growth for Slovenia than in its spring projections, with growth of just 1.1% now forecast for this year, instead of 1.8%. The IMF also revised its inflation forecast slightly downwards, to 2.5% for 2025. Banka Slovenije will as usual unveil its latest projections towards the end of the year, but the current indicators point to a gradual recovery in economic growth, although it will remain modest across the year, largely on account of the difficulties of the first half of the year.
We are also responding to the current situation as usual on the Governing Council of the ECB. The Governing Council decided at its most recent meeting to leave its key interest rates unchanged. Its decision was based on incoming data showing inflation in the euro area holding close to its 2% medium-term target rate, and the latest projections that suggest that inflation will remain close to this value over the medium term. The Governing Council’s future decisions will remain focused on seeing inflation stabilise at its 2% target rate over the medium term. The next steps will be based on an assessment of the inflation outlook and the risks surrounding it, the dynamics of underlying inflation, and the strength of monetary policy transmission.
In light of the persistent uncertainty in the international environment, the Slovenian banking system continues to perform well. The general level of systemic risks to the banking system has not changed over the last six months in our assessment, and the majority of the risks are assessed as low to moderate. The exception is cyber risk, which is assessed as elevated in light of the geopolitical risks. Banka Slovenije is also playing its part in the banking system’s successful handling of the shocks from the environment, through its macroprudential policy measures. These remain preventive and balanced, with a focus on strengthening the resilience of the banking system and limiting systemic risks.