Development Report
Development Report 2024
In Slovenia, a robust post-COVID-19 economic recovery, supported by improved conditions in trading partners and substantial fiscal policy measures, was followed by a slowdown in economic growth and an increase in inflation in 2022 and 2023 in the context of the energy crisis. The impact of rising cost pressures on competitiveness and the population's lower purchasing power was cushioned by measures to support businesses and the population. Despite a relatively weak performance in 2022, economic growth surpassed the EU average again last year, with GDP per capita in purchasing power parity reaching 91% of the EU average in 2023. However, the pace of narrowing the gap with the EU average has slowed: while the gap decreased by 6 p.p. from 2016 to 2019, it only declined by 2 p.p. from 2020 to 2023. Due to the epidemic, the general government balance turned from a surplus to a large deficit in 2020. The deficit gradually decreased with the phasing-out of the temporary COVID-19 support measures for businesses and the population. In 2023, however, it was still significantly affected (-2.5% of GDP) by measures aimed at mitigating the energy crisis and addressing the consequences of floods. Given the new fiscal rules, sustainable deficit reduction will require prioritised planning. Human resource development for delivering quality public services and facilitating the green and smart transformation is progressing too slowly and, despite severe labour shortages, access to quality jobs remains a challenge for certain population groups. While the quality of life has gradually improved, the at-risk-of poverty rate and inequalities have slightly increased in 2022 and 2023. Additionally, the accessibility of public health and long-term care systems faces growing challenges. A review of past trends and development challenges, as outlined in this year's Development Report, shows, similar to previous years, that the key areas of development policy requiring prioritization within the framework of public finances are: accelerating productivity growth and the transition to a low-carbon circular economy, reforming social protection systems (healthcare and pensions), and enhancing the strategic governance of public institutions. In view of the scarcity of public funds, the realisation of objectives in a number of areas will have to be combined with the use of private funds.
The priority areas for action analysed in this year’s report, which we consider crucial for the long-term sustainable development of Slovenia and higher quality of life, relate to the following challenges:
Trend productivity growth remains weak, although some of its factors have been gradually improving for some years. However, to achieve a significant boost in productivity, it is imperative to accelerate investment in smart and green transitions, as well as to expand and deepen business transformation processes within companies.
The educational attainment of the population has been on the rise for several years; however, the pace of human resource development to ensure the provision of quality public services and to facilitate the green and smart transformation of the economy has been too slow; certain indicators of the quality of basic and upper secondary education have shown signs of deterioration in recent years.
While the health status of the population has nearly returned to pre-epidemic levels over the last two years, the accessibility of public health and long-term care systems faces growing challenges.
Despite a severe labour shortage due to demographic change and employment rates at an all-time high, access to quality jobs is still a challenge for some people.
The at-risk-of-poverty or social exclusion (AROPE) rate and income inequality, which are among the lowest in the EU, have risen slightly in the last two years. However, the at-risk-of poverty rate for some vulnerable groups has consistently exceeded the EU average for many years.
Given the lack of progress in the transport sector and in the use of renewable energy sources, the pace of the transition to a low-carbon economy is too slow and the circular material use rate as a measure of the circular economy remains relatively low.
Certain aspects of government efficiency have shown improvement in recent years (digitalisation and introduction of quality standards in public administration, improvement of the quality and efficiency of the judicial system, reduction of administrative barriers, modernisation of public procurement practices), although most of the key challenges identified in recent years are still relevant today (lack of effective public sector governance, high burden of state regulation, mistrust in the rule of law and the judiciary, high perception of corruption, lack of predictability of the business environment and legislation); the good results in the areas of safety and global responsibility persist.