By the time Slovenia enters the second half of 2025, the dynamics of its economy will have changed dramatically. The resulting intersection of domestic performance and external pressures has fostered an increasingly toxic environment. The country is counting on a fiscal year 2025 inflation rate of around 2.5% for fiscal year 2025. This expectation reflects a generally positive economic outlook, despite persistent global uncertainty. By the second quarter of 2025, the country was experiencing a 0.7% year-on-year GDP growth. This growth is a testament to the strength of domestic demand.
In the second quarter of 2025, domestic demand was significantly higher than expected. This acceleration mostly reflected a boon from resilient household consumption. This increase in consumer spending is a very encouraging return to economic fundamentals as the household sector seems to be returning to confidence. The net exports sector was a negative contributor to growth over the same period, stressing continued struggles with international trade.
This was particularly true as the average Consumer Price Index (CPI) for the first half of 2025 hovered just below 2% year-on-year. This suggests that moderate inflationary pressures are returning. Economy roars back – In August, the economy shot forward in thrilling fashion, with the headline figure bouncing up to 3.0% YoY. This increase is the largest percentage completed to date this year. This recent surge is a reminder that despite progress on domestic fronts, external influences will continue to be a major threat.
Despite these positive indicators, Slovenia’s fiscal position is projected to stay – on the whole – stable. The deficit ceilings for 2025-2026 are set at a slightly higher figure, laying the groundwork for possible hurdles to come. The government continues to face large unknowns on the international front that could turn into major execution risks for the budget. Public wage bill and pension reform could add to checks that fiscal management is already facing.
Further out, FY25 growth forecasts are calling for an expansion slightly over 1.0%. Risks from external demand are still a big worry. The performance in the first half of 2025 was relatively flattish, creating a cautious outlook for the remainder of the year. There are several key complexities that policymakers should be prepared to navigate. They have to balance fiscal responsibility with meeting the needs at home and pressures from outside interests.