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Euro area economic sentiment indicators for the fourth quarter of 2025 point to a continued expansion of economic activity. The average values of the composite Purchasing Managers’ Index (PMI) and the Economic Sentiment Indicator reached their highest levels since the second quarter of 2023, with confidence improving across all activities and among consumers. On a year-on-year basis, confidence was noticeably higher in industry and construction. In its December projections, the ECB nevertheless expects economic growth in the euro area to be slightly lower this year than in 2025, when growth at the beginning of the year was supported by frontloading effects in anticipation of higher tariffs. Private consumption is projected to remain the main driver of growth, supported by rising real wages, high employment, and a gradual decline in the saving rate. Growth is also expected to be underpinned by business investment and increased expenditure on infrastructure and defence (particularly in Germany). Real GDP growth is projected at 1.2% this year (1.4% in 2025) and at 1.4% in both 2027 and 2028. Risks to the realisation of the forecast remain elevated, primarily due to trade tensions and financial and geopolitical uncertainties. On the upside, economic growth could exceed expectations as a result of higher defence and infrastructure spending and the implementation of reforms aimed at enhancing productivity.

Last year, economic activity in Slovenia was driven by construction and household consumption, amid weaker manufacturing output and exports. Manufacturing output strengthened slightly month-on-month in November; however, over the first eleven months of the year it remained lower year-on-year. The largest declines were recorded in the manufacture of motor vehicles, trailers, semi-trailers and other transport equipment and in the metal industry. Real exports of goods increased month-on-month in November for the second consecutive month; however, over the first eleven months they remained slightly below the level recorded a year earlier (by 0.2%), while imports were higher (by 1.6%). The largest year-on-year declines were recorded in exports of motor vehicles and other machinery and equipment, as well as in exports of iron and steel and certain other materials (rubber products, non-metallic mineral products, and paper). In the first three quarters of 2025, Slovenia’s export market share in the EU market also declined year-on-year, by 2.1%. The decline was driven by most main product groups (road vehicles, electrical machinery and equipment, industrial machinery and pharmaceutical products), while the market share of energy-intensive products remained broadly unchanged compared with a year earlier. By contrast, growth in the value of construction work put in place strengthened markedly from the second quarter of last year onwards and, over the first eleven months, was around one tenth higher year-on-year. In most trade segments, real turnover increased in October following a decline in the third quarter and, over the first ten months of the year, exceeded year-earlier levels across all trade segments. In other market services, real turnover declined sharply in October after strong growth in the third quarter, while over the first ten months of 2025 it was lower on a year-on-year basis only in administrative and support service activities. Household consumption was higher year-on-year in the fourth quarter, with purchases of new passenger cars recording particularly strong growth. The economic sentiment indicator, which strengthened further in December, rose above its long-term average for the first time in three years. 

Over the first eleven months of 2025, the number of persons in employment was 0.4% lower year-on-year, while the number of unemployed persons in December 2025 slightly exceeded the very low level recorded in the same month a year earlier; gross wage growth strengthened somewhat further in October, supported by pronounced wage growth in the public sector. The number of persons in employment has stagnated for several months (seasonally adjusted), while it was 0.4% lower year-on-year in the first eleven months. The sharpest year-on-year declines were recorded in administrative and support service activities and in communication. The number of unemployed persons remained largely unchanged month-on-month in December (seasonally adjusted), while it was marginally higher year-on-year (by 0.3%). The number of long-term unemployed and older unemployed persons (aged 50 and over) remained lower than a year earlier (–5.6% and –5.3% respectively), while the number of unemployed young persons was nearly one tenth higher. Year-on-year nominal growth in the average gross wage was higher in October than in previous months, primarily due to strengthened wage growth in the public sector. In the first ten months of 2025, the overall average gross wage increased by 4.6% in real terms (by 7% in nominal terms) – by 7.4% in the public sector and by 2.9% in the private sector (by 9.8% and 5.3% in nominal terms respectively).

Consumer prices remained unchanged in December for the third consecutive month, while year-on-year growth increased to 2.7%. The acceleration in year-on-year inflation in December was largely driven by less pronounced seasonal price drops (package holidays and clothing and footwear). Food and non-alcoholic beverage prices, which were 4.5% higher year-on-year, continued to make the largest contribution to overall inflation. However, their annual growth moderated in recent months, as prices declined by 0.9% between October and December. Slovenian industrial producer prices increased marginally in November, while year-on-year growth eased to 1.1%, reflecting a year-on-year decline in energy prices.

The deficit of the consolidated general government balance amounted to EUR 1.1 billion in the first eleven months of 2025, which is EUR 560 million more than in the same period a year earlier, with the increase being planned. Over the same period, general government revenues increased by 6.5%, significantly less than in the same period a year earlier (10.8%). This deceleration reflected cyclical factors and measures that temporarily boosted social-security contributions and certain tax revenues in 2024. General government expenditure in the first eleven months of 2025 was 8.6% higher year-on-year, representing slightly higher growth than in the same period a year earlier (7.8%). The main drivers of expenditure growth in 2025 were employee compensation related to the implementation of the wage reform, pensions, and certain other transfers. After declining in 2024, capital expenditure also increased in 2025, particularly due to higher spending on military equipment. The bulk of the consolidated balance deficit stemmed from the central government budget deficit, which, as expected, widened markedly in December and amounted to EUR 1,717 million or 2.4% of GDP in 2025, which is slightly less than envisaged in the amendments to the state budget for 2025 (EUR 1,866 million, or 2.6% of GDP). This increase was mainly driven by the disbursement of the winter allowance to public employees, the winter supplement for pensioners, funds to cover the liabilities of public health institutions, and a strengthening of investment expenditure.