Slovenia Country Risk Report Q4 2018
The newly-formed five-party coalition government will face many challenges to policy making, particularly as reforms will require the support of the more radical leftist party in parliament.
Preliminary data support our view that the pace of growth will ease in 2018 and 2019, as regional headwinds and capacity constraints weigh on activity. None-theless, we expect growth to remain broad-based and robust, with the economy in a relatively healthy condition.
Major Forecast Changes
We have adjusted our forecast for the general government budget balance in 2019, projecting a surplus of 0.5% rather than 0.7% due to plans for higher spend-ing from the incoming government coalition.
The elevated risk of disputes within the five-party coalition, and with the leftist party it is reliant on for parliamentary votes to approve key reforms, will keep the possibility of another snap election open for the foreseeable future.
Mounting threats to global trade could impact on Slovenia's export-facing industrial sector, particularly if US tariffs affect demand from key EU trading partners such as Germany.
A maritime border dispute with Croatia could worsen if both sides are unable to reach an agreement, especially if Slovenia unilaterally asserts control over the contested waters based on an international tribunal ruling that Zagreb does not recognise.
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