Development Report

Development Report

Development Report 2022

Slovenia’s economy saw a quick rebound in 2021 with the help of massive government measures that kept the material and financial situation of the population relatively stable. The burden of the epidemic assumed by the government was reflected in a high general government deficit and an increase in general government debt, especially in 2020. The main challenge remains to overcome the development gap with the EU average. The Development Report, with which the Institute of Macroeconomic Analysis and Development annually monitors the implementation of the Slovenian Development Strategy (SDS) 2030, contains important recommendations in this regard. To achieve long-term sustainable development and a better quality of life, development policy measures should focus on accelerating the inclusive transition to innovation-driven growth with a highly productive low-carbon circular economy. In this way, the measures would also help increase the resilience of the economy and society to crises, such as the current aggravation of the geopolitical situation due to the war in Ukraine.

The transition to innovation-driven economic growth with a highly productive economy has been slow since the global financial crisis, and the transition to a low-carbon circular economy has been insufficient. The gap with the EU average in GDP per capita in purchasing power standards (an indicator of economic development and material well-being of the population) has only approached the 2008 level in 2021, and Slovenia is still far from achieving the SDS 2030 target. The reason for the slow narrowing of the development gap in the last decade is modest productivity growth, which is mainly due to low investment after the global financial crisis. At the same time, the impact of several years of declining investment in intangible capital after the last crisis (R&D, ICT, on-the-job training), slowing the transition to innovation-driven growth with a highly productive economy, is becoming increasingly evident; progress in decoupling economic growth from resource use and emissions has also been slow. Recently, there have been some shifts in addressing the challenges of the green transition and the transition to the fourth industrial revolution. For example, more resources will be allocated for these purposes in the future than in the previous medium-term period. This will be supported by the reformed part of the Recovery and Resilience Plan (RRP). Nevertheless, the ambitious targets for achieving the twin transition indicate that their achievement will need to be further supported by systemic measures and resources. A growing obstacle to effective economic transformation and productivity growth is the increasing shortage of appropriate labour resulting from demographic change and the slow response to demand for new skills.  

The COVID-19 epidemic has severely affected the health status of the population and has exacerbated the problem of access to healthcare and long-term care. The long-standing trend of improving the health status of the population has been interrupted by the epidemic. The epidemic has contributed to a further increase in mental health problems, health inequalities are expected to worsen and problems with accessibility of healthcare have also worsened. Accessibility of healthcare is good in terms of financial coverage of rights, while the healthcare system faces significant shortages of health workers and long waiting times. Several short-term measures were taken to increase the resilience of the healthcare system. A special law was passed to ensure investment in healthcare until 2031, and significant funds were earmarked for this purpose in the RRP for the coming years. In the last two years, the long-standing problem of access to long-term care (LTC) has worsened significantly. A framework law (adopted in 2021) will give the beneficiaries a wide scope of rights, but the biggest challenge remains the regulation of compulsory LTC insurance. In the long term, in addition to a sustainable structure of funding sources, adequate employment planning and improvement of working conditions will be crucial to increase the resilience of the healthcare system and the accessibility of LTC.

Among Slovenia’s main development challenges analysed in the Development Report 2022, we highlight the following areas:
-    accelerating productivity growth 
-    accelerating transition to a low-carbon circular economy 
-    strengthening the resilience of the healthcare system and the financial sustainability of social protection systems, in particular in view of an ageing population, while providing quality services and adequate incomes to vulnerable groups
-    strengthening the developmental role of the government and its institutions

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