This year’s regular Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group, taking place in Bangkok, once again bring to the forefront the challenging economic environment marked by the war in the Middle East and other geopolitical tensions. The key finding is that both the global economy and the euro area economy have proved resilient despite challenging conditions. This also applies to the Slovenian economy, which significantly exceeded growth expectations in the first half of the year. Another key focus of the meetings is persistently elevated inflation driven by rising energy prices, which the ECB Governing Council is addressing through adjustments to interest rates. A third important theme of the meetings is investment in artificial intelligence, which can make a significant contribution to the pace of development across individual economies.
The global economy has proved resilient despite numerous challenges, although this resilience is unevenly distributed across countries. High investment in artificial intelligence has supported demand and technological progress, but the combination of geopolitics and technology is widening the divide: countries that are integrated into technology value chains or are energy exporters are recording stronger growth, while energy importers and countries outside these technology flows face rising costs and weaker demand. In its October forecast, the IMF expects global GDP growth of 3.1% in 2026 and 3.4% next year.
Although economic growth in Europe is weaker than projected before the outbreak of the war in the Middle East, recent developments have exceeded expectations. This is attributable to the progress made in diversifying energy sources, coordinated European action, and appropriate macroeconomic policy responses. Under these circumstances, the IMF has maintained its April forecast that euro area growth will amount to 1.1% in 2026 and 1.2% in 2027.
Inflation remains above target, mainly because of persistent energy prices, while underlying inflationary pressures have so far remained relatively contained. Europe has made significant progress in its energy transition, but it remains exposed to high energy prices, demographic challenges, and the need for higher defence spending. Productivity growth remains weak, reflecting the fragmentation of the Single Market and the slow adoption of new technologies, which has left Europe lagging behind the United States. Structural reforms, greater integration of energy and capital markets, and the removal of remaining barriers in the Single Market are essential for long-term competitiveness and resilience. Fiscal policy must be carefully calibrated so as not to undermine efforts to bring inflation down, while long-term fiscal sustainability is becoming increasingly important in view of population ageing and new fiscal pressures.
In Slovenia, economic growth in the first half of the year significantly exceeded expectations. The IMF therefore expects substantially stronger growth for Slovenia in 2026, at 3.0%, compared with 2.0% in its previous April forecast. At the same time, the IMF has revised its inflation forecast upwards, to 3.4% for this year.
Banka Slovenije will present its new forecast, as usual, in December. Current indicators point to stronger-than-expected economic growth, alongside persistent domestic inflationary pressures, particularly from wage and service price growth, and renewed upside risks to energy and food prices.
Monetary policy response
The ECB Governing Council is responding to the current environment of elevated risks in line with its mandate. At our latest meeting, we raised the key interest rates by 25 basis points, with the interest rate on the deposit facility now standing at 2.5%. We consider that this level of interest rates provides sufficient flexibility to respond appropriately to further developments. Future decisions will continue to be based on the prevailing inflation outlook, the associated risks, and the strength of monetary policy transmission. Our objective remains to stabilize inflation at 2% over the medium term, and we will decide on any further measures on a meeting-by-meeting basis.
Situation in the Slovenian banking system
Despite significant economic, financial, and geopolitical uncertainty in the international environment, the Slovenian banking system remains stable. The overall level of systemic risk remains moderate, with the exception of macro-financial risks and information and communication technology-related risks, which remain elevated, while income risk remains low. The banking system’s resilience to shocks remains high, supported by Banka Slovenije’s microprudential measures and proactive macroprudential policy stance.