Slovenia’s sunny outlook a bright spot amid gloomy neighbours

Calm waters: The outlook is good for Slovenia, while neighbours need to be more reflective

Slovenia tops the list of tier-three countries in position 34 with an overall rating of 63.37. Its scores have been increasing steadily and our experts believe they will continue to rise.

The country’s economic assessment has gained more than one point since the first quarter of the year – it stands at 52.00 from 50.93 in the first quarter.

And the economic outlook is positive: domestic demand is getting back on track due to positive employment figures. The number of employed persons rose by 2.8% in the second quarter of the year compared with the first.

Also, private consumption was up 2% in the second quarter compared with the same period in 2015.

Being an export-led economy, Slovenia could further benefit from the dismissal of EU sanctions against Russia. However, due to geopolitical tensions, this is unlikely to happen soon.

The government has succeeded in reducing the country’s deficit in the years after Slovenia’s banking system was bailed out in 2013.

“Credit agencies have the confidence Slovenia commits to its budget,” says Vladimir Vano, chief economist at Sberbank Vienna.

Slovenia’s political risk score has been on the rise as well, after a period of political instability in 2014 ahead of elections. Its score stands at 68.62 – up from 66.85 two years ago.

“The government did not do that much but increased stability just by being there,” says Ales Pustovrh, managing director at research institute Bogatin in Ljubljana. “When you stop banging your head against the wall, you start feeling better.”

Moreover, at present Slovenia is more stable than most of its neighbours.

Hungary fell one position in the latest round of ECR rankings and is placed at 61st, while Croatia is down in the tier-four category at 68th.

In Italy, a banking crisis and upcoming referendum on constitutional change aimed at reducing the powers of the Senate means many of ECR’s experts are pessimistic on its outlook – Italy is down 10 positions in the latest ECR results.

Only Austria seems to be holding up with a solid 13th ranking, although the ECR score for government stability is declining due to a troublesome presidential election.

This article was originally published by ECR. To find out more, register for a free trial at Euromoney Country Risk.