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SLOVENIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 26,284 21,108 18,800 63
         
GNI per capita
 US $ 11,830 9,810 9,760 51
Ranking is given out of 208 nations - (data from the World Bank)

Books on Slovenia

REPUBLICAN REFERENCE

Area (sq.km) 
20,273

Population 
2,011,473

Capital 
Ljubljana 

Currency 
Tolar 

President 
Janez Drnovsek

Private sector 
% of GDP 
40% 



 
Update No: 098 - (01/07/05)

Economic success story 
During the accession process into the EU last year, Slovenia and its highly educated officials (like the bulk of the population in fact) won high praise from the European Commission for its reforms, many of which took place back in the 1990s. When it entered the Union, it did so with the highest standard of living of the 10 new member states. 
A year later, it has built on that success, with a 12 percent increase in exports and growth at 4 percent of gross domestic product (GDP). Slovenia has by far the best economy in the entire former communist world, with a higher GDP per capita than Greece and Portugal, who both joined the EU in the 1980s.

IMF forecasts 4% growth for Slovenia this year
The Slovenian economy will expand by 4% annually in 2005 and 2006, according to the World Economic Outlook, a report released by the International Monetary Fund (IMF). The IMF believes inflation will stand at 2.6% this year and 2% in 2006. 
According to the report, Slovenia entered the ERM II exchange rate mechanism in June 2004 (not the same thing as full membership of the euro, but a prelude to it), reducing inflation to the Maastricht criterion level and maintaining competitiveness. Other matters, including labour market reforms and wage policies, present a continuing policy challenge.
For what it calls "emerging European markets", the report says that they face two main challenges: the continuing economic gridlock in Western Europe and appreciation of the euro. IMF warns that those countries that are awaiting the euro must push through with structural reforms and carry out fiscal consolidation.
Compared to other EU newcomers, Slovenia's expected growth is solid. Only Baltic economies, which are set to grow at a rate of 6.9%, and Slovakia with 4.8%, will grow faster, the report suggests.
Other reports, however, aver that GDP is expected to grow by 3.8% this year and 3.9% in 2006, while its inflation rate is due to fall from 3% this year to 2.7% next year, justifying its membership of the Euroland club. This development should put a cap on its successful performance and encourage one thing lacking - abundant foreign direct investment (FDI). FDI is barely over $2bn to date, a poor showing for such a promising place.

Catching up with the EU
Not content to stay at No. 16 among the 25 members of the expanded Union, Slovenia's government has set an ambitious target: to reach the EU's average standard of living within eight years, for which more FDI is essential.
Actually, there are of course other things lacking too. A new tax code came into force in the New Year on January 1st. But it is proving opaque and cumbersome for business. It needs to be simplified. A look at Estonia and Russia would not be amiss here, both with buoyant economies, albeit from considerably lower bases than Slovenia's, after adoption of greatly simplified tax regimes.
The government economic panel, an inter-ministerial body, has advocated a re-think of the whole matter. It advised the setting-up of a task force to deliberate the best way forward to fiscal soundness and probity.
Slovenia is also one of just three former Eastern-bloc states - the others are Estonia and Lithuania - seeking to adopt the euro in 2007. 
Both these choices could prompt sharp changes in a country that has prided itself in the gradual nature of its transition, and the political and social consensus that has accompanied it. 

The historical roots of success
It is generally acknowledged that the roots of Slovenia's current success were laid down well before the country decided to opt for EU membership. Yugoslavia's softer brand of socialism had exposed Slovene companies to market economics, indeed, well before the country declared independence in 1991. 
With its proximity to Western Europe and a well-educated work force, Slovenia was the hub of Yugoslav exports to the West. With just 8 percent of Yugoslavia's population, Slovenia generated 20 percent of the socialist federation's gross domestic product. Slovene efficiency, attributed by some to 600 years of Hapsburg rule, was a source of admiration, jealousy and humour in neighbouring Yugoslav states. "Laws are drafted in Belgrade, read in Zagreb and implemented in Slovenia," ran one joke. 
"Slovenia was the most developed area of Yugoslavia," said Anton Rop, Slovenia's prime minister at the time of EU accession. "It wasn't so dramatic for us to open our borders in the 1990s. We were in a favourable position" and had a strong service sector and less 'rust-belt' heavy industry to reform compared with other former Communist-bloc states, he said in an interview. 

The crossroads of the region
It is not only history that is marking out Slovenia for a great destiny; so is geography, or rather a new historical geography and geopolitical status post-independence.
Slovenia now sees itself as a bridge between East and West, particularly for the former Yugoslav states, which at one time shared the same legal framework as Slovenia. Slovene civil servants have been seconded to other former Yugoslav states, including Serbia, to help implement reforms. With Serbia, Croatia and other ex-Yugoslav states still outside the European Union, Slovenia has also set up a Centre for EU Integration Support in Ljubljana that offers short-term programmes to help applicants adopt EU reforms. 
Two Slovenes are currently playing a prominent role in the shaping of European policy. Janez Potocnik is the EU's commissioner for science and research, responsible for one of the commission's largest budgets. Slovenia's foreign minister, Dimitrij Rupel, is also chairman of the Organization for Security and Cooperation in Europe, which is not part of the EU but is one of the main instruments of encouraging democratic development in areas such as former Soviet Central Asia and the Balkans. Almost everything is looking good for the impressive Slovenes.

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BANKING

Banka Koper to sell 14.5% stake in Cimos


Banka Koper intends to sell its 14.5% stake in Cimos, the Koper-based supplier of the automotive industry, because the bank does not function as a strategic partner in the company and its stake cannot be considered a portfolio investment either, it was reported recently.
The daily Delo reported in April that the bank is preparing a due diligence and a valuation of Cimos. Cimos Chairman, Franc Krasovec, said that the company is worth between 300m Euro and 450m Euro. Krasovec noted that there is no single owner in Slovenia who is capable of acquiring the shares. He added that Banka Koper would not allow a hostile takeover that would undermine its operations. "We have become a well-known development supplier, ranking in the world's first league of producers," Krasovec was quoted as saying. Currently, the Cimos group employs around 6,800 people. It plans to set up a new development strategy to be based on four divisions: automotive production, energy, farming machines and machine construction. The group is expected to generate 2bn Euro in annual revenues within the next 10 years.

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FOOD & DRINK

Pivovarna Lasko halves Q1 loss

Slovenian brewer Pivovarna Lasko cut its first-quarter net loss to 114.6m tolars (478,000 Euros) despite sales of only 3bn tolars (12.5m Euro), down 12.4% year-on-year, Slovene Press Agency reported.
The supervisory board decided that shareholders will get dividends of 50 tolars (0.21 Euro) per share, only half as much as in 2004. Lasko announced that a net loss is typical for the beverage industry in the first quarter of the year. Even volume sales were also down. The brewery sold 188,151 hectolitres of beer and water in the first three months of 2005, 13.2% less than the year before. This is 15.8% of the total volume planned for the year. The supervisory board has also decided that the annual general meeting will be held on June 17th. Shareholders are expected to back the distribution of distributable profit whereby dividends would be at 50 tolars per share while 5.3bn tolars (22.1m Euro) will remain intact.

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FOREIGN COOPERATION

Ljubljana, Bratislava discuss improved cooperation

Slovenian Transport Minister, Janez Bozic, met his Slovak counterpart, Pavol Prokopovic in Bratislava on May 19th to discuss ways of boosting bilateral cooperation in road, rail and air transport. During the talks, both sides established that the only Slovenian commercial port was one of the main ports for Slovak companies. Bozic said that last year the port of Koper transhipped 300,000 tonnes of cargo for Slovakia, Slovene press Agency reported.
Meanwhile, Prokopovic was eager to learn about progress in the construction of the pan-European transport corridor, which links the Adriatic and Eastern Europe.
Bozic told him that Slovenia was concluding the construction of the first part of the route, between Koper in the SW and Sentilj in the NE. The pair agreed that there were no problems between their countries in road transport. Both ministers also established that the volume of cargo transported by rail between the two countries almost tripled after the opening of a direct railway link between Slovenia and Hungary at Hodos in 2001. Other issues discussed public procurement procedures for the construction of road infrastructure in Slovakia and shared air control between eight Central European countries under the Central European air Traffic Services (CEATS) agreement. Slovakia wants the project to continue but Bozic elucidated that Slovenia would like to establish special partnership among the participating countries. Austria, Slovakia and Hungary are the most fervent advocates of the agreement while Italy, Croatia and Slovenia have not ratified it yet.
Bozic has recently said Slovenia would not ratify the deal until it was guaranteed an equal role in the plans.

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RETAIL

Engrotus posts higher revenues and sales in 2004

Engrotus, the third major retailer in Slovenia, raised revenues by 35% to 374.2m Euro last year, while net profit reached 11.2m Euro, an increment of 16.6% compared to the year before, Engrotus Director, Alexander Svetelsek, said on May 27th, the Slovene press agency reported.
Tus group, which includes the retailing business as well as restaurants, cinemas and gas stations, generated revenues of 439.5m Euro, up 50% on an annual basis and net profit went up by 67% to 6.3m Euro. Tus is a privately owned non-listed limited liability company based in Celje. According to Svetelsek, the company held 18.3% of the retail market last year compared to only 5% four years ago. He stated that the aim of the company is to become the most successful European retailer. Last year the company owned three retail chains (Vele, Preskrba, Izbira Lasko) and invested 64.6m Euro. This figure made Tus the leading domestic investor in the country, Svetelsek said, adding that this year investments would reach 70m Euro. In the next few months, Tus, which currently boasts 65,000 square metres of store space, plans to open five new supermarkets.
In the coming months it also plans to boost the number of gas stations from four to 25 or 30. Svetelsek remarked that once the company reaches 25% market share in 2007 then the company would no longer make any investments. It will only refurbish old stores and intends to extend to Serbia and Macedonia. The first store is expected to be launched in Serbia in 2006.
Svetelsek said the company has no other plans for Croatia as it has one supermarket in the coastal city of Rijeka. He underlined that the retail market is inhumane there and all foreign retailers are facing loss. The main objective of the company for this year is to streamline costs and business processes and the flow of information that will improve efficiency and increase returns.

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TOURISM

Italian tourists prefer Slovenia, survey shows

A recent survey of an Italian tourism and transport market research agency has shown that Slovenia is one of the popular destinations among Italian tourists, Slovene press Agency reported.
Citing the results of the TMT Pragma survey, the Slovenian Tourist Board (STO) said Slovenia ranks first in the business sector, second in family tourism and fourth in traditional tourism. The results indicated that in business tourism Slovenia was preferred by most tourists, followed by Spain, the Czech Republic, Austria, Egypt, France and Croatia. In family tourism, Slovenia placed after Mexico and ahead of Austria, Morocco and Spain. In the category dubbed traditional tourism, Slovenia placed fourth after Mexico, Belgium and Austria. STO stated that Pragma carried out a comprehensive survey at most of Italy's road, rail, port and airport border crossings. The importance of the Italian market for Slovenia's tourist industry is also reflected in the 2004 data of the national statistics office. Italians were the biggest group of tourists visiting the country with 786,130 overnights (up 8% on 2003 figures), and 313,296 arrivals (up 9%). Italians accounted for 18% of the total of overnights by foreign visitors.

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