Since 2016 Slovenia has again been narrowing its development gap with the EU average, social inclusion of the population remains relatively high, while the efficiency of energy and resource consumption has improved somewhat. These are the key findings of this year’s Development Report of the Institute of Macroeconomic Analysis and Development. In certain areas, developments deviate from the principles of sustainable development and pose a risk to the achievement of the primary objective of the Slovenian Development Strategy 2030. For effective dealing with key development challenges, the report pays special attention to recommendations for development policies. In our view, these should be focused on acceleration of productivity growth, adjustment to demographic change and strengthening the development role of the government and its institutions, while striving to reduce the environmental burden.