Slow is beautiful? Slovenia’s approach to transition

Slovenia's per capita income, while lagging behind the EU average, is comparable to that of Greece or Portugal: in 2004 the country's GDP per inhabitant measured in PPS, reached around 80% of the EU-25 level. The statistics reflect the fact that throughout the painful regime change prior to EU accession - dismantling the system of economic planning to create a market economy - Slovenia outperformed the other transition countries on nearly every macroeconomic indicator. GDP growth has been steady and robust and the external position strong while the current account has been broadly in equilibrium.

However, the economy came under strain towards the end of the nineties as inflationary pressures built up and the fiscal balance turned negative. While good initial conditions helped the country manage the earliest stages of transition at relatively low cost, it was the implementation of effective stabilisation policies that then helped the economy recover its strength.

However, structural indicators show that Slovenia is lagging behind in completing the transition. Reforms in the financial sector, labour market and utility reforms are major challenges which still lie ahead.

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