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In its Autumn Forecast of Economic Trends, prepared in early September, the Institute of Macroeconomic Analysis and Development (IMAD) projects economic growth to be considerably higher this year (3.8%) than last year (1.5%), with the broad-based strengthening of economic activity also significantly exceeding the spring forecast (2.0%). “The acceleration, which was pronounced in the first half of the year, reflects a combination of several factors: a strong recovery in exports, further supported by the launch of new production capacities in the pharmaceutical and automotive industries; the completion of major investment projects; and continued growth in household disposable income and consumption,” explained Alenka Kajzer, Acting Director of IMAD. The broad-based strengthening of economic activity also points to the resilience and adaptability of the economy amid heightened economic and geopolitical uncertainty in the international environment. Some factors, particularly the acceleration in investment ahead of the completion of major investment projects, are one-off, and their impact will therefore gradually fade. Total exports are projected to increase this year, supported by improved export performance and new production capacities in the domestic pharmaceutical and automotive industries. Growth in manufacturing will therefore be concentrated largely in more technology- and investment-intensive segments, while other industries will make more modest contributions. High energy and labour costs remain a major constraint, weighing on corporate profitability. The restructuring of automotive suppliers continues, posing adjustment challenges in the short term while creating opportunities for integration into new value chains over the longer term. Investment provides the strongest cyclical impulse in 2026, with its strong growth driven by the simultaneous completion of the RRP and the second railway track project, municipal investment ahead of the local elections, and private investment in manufacturing and services. This strong investment growth therefore reflects a combination of strong public investment activity with an expansion of private-sector production capacity. Domestic demand is also supported by private consumption, underpinned by high employment, faster wage growth and improved consumer confidence. The composition of household spending points in particular to increased purchases of cars, other non-food goods and tourism services. Despite favourable income developments, the household propensity to save remains high. Growth in overall spending, together with a continued increase in foreign tourist arrivals, is supporting trade, accommodation and food service activities, as well as other leisure and personal services. Government consumption will increase this year, mainly due to the full implementation of the new long-term care system, particularly the introduction of public funding for institutional care, which will shift part of expenditure from private to government consumption. In addition, employment in the general government sector is increasing, most significantly in health and social work. 

As the effects of one-off factors gradually fade, economic growth is projected to moderate over the next two years, to 2.5% in 2027 and 2.3% in 2028. Exports will grow broadly in line with foreign demand. In 2027, growth in the export-oriented sectors will continue to be supported not only by the recovery in trading partners’ industrial sectors but also by the effects of investment in the pharmaceutical and automotive sectors. In 2028, the contribution from new production capacities will diminish, while fewer working days will also weigh on growth. Investment growth is expected to slow significantly in 2027, mainly reflecting the completion of several major projects in 2026. However, this will not represent a broad-based slowdown in investment, as high capacity utilisation is expected to support continued investment in machinery and equipment, while residential investment is projected to strengthen. In 2028, investment growth is forecast to pick up and become more broad-based, as public investment resumes growth and private-sector residential and business investment continues to increase. Infrastructure projects will make a significant contribution to public investment, including those financed by the Reconstruction Fund, whose resources must be utilised by the end of 2028. Household consumption growth will also remain a relatively stable source of domestic demand and, in line with disposable income growth, is expected to be only slightly lower over the next two years than this year. Government consumption growth is also expected to moderate. “For economic growth to remain sustainable in the coming years, it will be crucial to sustain private investment following the completion of major projects, make full use of new production capacities, capitalise on the recovery in foreign demand, and mitigate the adverse effects of high energy and labour costs and labour shortages,” Kajzer emphasised.

Employment is expected to be slightly higher this year than last year and to remain broadly stable at a high level over the next two years amid limited labour supply, while unemployment will remain low. Employment in public services will increase slightly this year, particularly in health and social work and education, while employment in private-sector activities will remain below last year’s level. The largest declines are expected in manufacturing, construction and some market services. Many companies continue to report labour shortages, which, in IMAD’s assessment, are largely structural and reflect demographic trends. Over the next two years, total employment is expected to remain broadly unchanged, with further growth concentrated mainly in public services, particularly in health and social work, reflecting the growing needs of a long-lived society. Continued employment growth among foreign nationals will partly offset the decline in the number of Slovenian nationals in employment. The number of registered unemployed persons is expected to remain broadly stable this year, averaging around 45 thousand, before declining further over the next two years to a historically low level. This will mainly reflect demographic changes and increased transitions from unemployment into inactivity or retirement.

Nominal growth in the average gross wage is projected to accelerate to 7.9% this year before gradually moderating in the coming years. In the public sector, wage growth (8.3%) will continue to be driven by payments related to the pay reform and collective agreements, although their impact will gradually diminish. In the private sector, wage growth is projected to strengthen markedly from last year (to 7.5%). This will mainly reflect stronger growth in economic activity, persistent labour market pressures, spillovers from higher public-sector wages to wage expectations in the private sector, and the increase in the minimum wage. In the coming years, wage growth is expected to gradually moderate as companies seek to maintain their competitiveness.

Inflation is expected to average 3.1% this year, exceeding the spring forecast (2.6%), mainly due to higher energy and services prices, while food price growth is also expected to pick up towards the end of the year. The higher contribution of energy prices to inflation will continue to reflect mainly high petroleum product prices on the Mediterranean market, which have risen since the outbreak of the war in the Middle East. The forecast assumes that measures to mitigate high petroleum product prices will remain in place. Energy price growth will also be affected by the transitional arrangements associated with the introduction of the new electricity network charge system. Services price growth will remain elevated amid continued relatively strong wage growth, particularly in activities where labour shortages are adding to wage pressures and demand remains relatively robust. Higher energy prices and adverse weather conditions are also expected to push up food price growth, particularly for unprocessed food, where changes in production conditions feed through more quickly to final prices. Growth in non-energy industrial goods prices is expected to remain relatively subdued. Over the next two years, assuming no new external shocks, inflation is expected to gradually moderate. Its dynamics, particularly in 2027, will nevertheless continue to be influenced by the pass-through of this year’s cost pressures, especially to the prices of certain energy products (electricity and gas) and food. Price growth is expected to strengthen, particularly for processed food. Services price growth will also remain elevated amid continued growth in incomes and demand.

The Autumn Forecast is subject to significant risks, which are predominantly on the downside and stem primarily from the international environment and, to a lesser extent, from domestic factors. There are, however, also upside risks to economic growth, particularly from an easing of geopolitical tensions and the implementation of development-oriented measures. International risks relate primarily to the evolution of the war in the Middle East and developments in global energy markets. Prolonged disruptions to the production and export of energy commodities and other key raw materials from the Persian Gulf could lead to further increases in oil, natural gas, petroleum product, fertiliser and food prices, as well as transport costs, while also exacerbating supply chain disruptions. A prolonged closure of the Strait of Hormuz, or severe restrictions on traffic through it, would amplify these effects and further weigh on global and European economic growth. At the same time, the risk of higher energy prices feeding through to underlying inflation, wage growth and inflation expectations would increase, potentially prompting tighter monetary policy and further constraining economic activity. Trade tensions and developments in financial markets also remain important sources of uncertainty. “Additional risks include potentially more pronounced effects of climate change, particularly on food prices, and larger corrections in the value of AI-related investments,” Kajzer said. Domestic risks include, in particular, more severe labour shortages, which could further intensify labour cost pressures and weaken corporate competitiveness. “Upside risks to economic growth could stem mainly from an easing of geopolitical tensions, stronger effects of defence and infrastructure spending, improvements in the business and tax environment, a more robust technology investment cycle, and greater success in attracting highly skilled workers,” Kajzer added.