|

Slovenia: GDP shifted two gears higher

The strong 1H26 performance prompted a sizeable upgrade to our growth outlook. GDP expanded by 4.1% y/y in 1H26, with domestic demand remaining firmly in the lead and investment providing particularly strong support. Private consumption should stay resilient, on the back of solid real wage growth and a supportive labor market, while investment momentum should gradually moderate as some one-offs fade and the RRF enters its final phase. External demand remains less certain, although recovering demand from key trading partners and new capacities in the automotive and pharma sectors should provide some support. We have raised our FY26 GDP forecast to 3.2%, from 2.0%, with risks still tilted mostly to the upside, before some moderation towards 2.5% in 2027.

Inflation pressures strengthened in 2Q, largely reflecting renewed energy effects, before July-August brought some relief and the headline moved back close to 3% y/y. Energy remains the key source of volatility, while services continue to run above the headline and food prices provide an important offset. Encouragingly, second-round effects remain relatively contained thus far. We see inflation averaging around 3.2-3.3% in 2026 and gradually moderating towards 2.5% in 2027, although geopolitical developments and the energy-price outlook keep risks tilted to the upside.

On the fiscal side, the 2026 budget rebalance confirms a broadly supportive stance, with the budget deficit target remaining just shy of 3% of GDP. Stronger growth and tax intake provide an important offset to higher defense, RRF and social policy-related spending, although expenditure momentum continues to limit room for rebuilding fiscal buffers. On the market side, global factors continue to dominate yield moves, while spreads remain firmly in the sub-40bp zone. The improved growth backdrop and solid rating profile continue to support our view of broadly steady spreads ahead.

Download The Full Slovenia Outlook

Author

Erste Bank Research Team

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

More from Erste Bank Research Team
Share:

Editor's Picks

AUD/USD shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.


USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.


Gold extends slump below $4,300 on broad US Dollar demand

Gold fell through $4,300 on Monday, as demand for the US Dollar surged ahead of the Federal Reserve's monetary policy decision this Wednesday. Increased bets for an interest rate hike lead the way up.

Crypto Today: Bitcoin, Ethereum, XRP recover ahead of US Senate vote on CLARITY Act

Bitcoin edges higher, trading near $77,884 as of Monday, in tandem with broader gains across the cryptocurrency market. Ethereum and Ripple follow Bitcoin’s neutral-to-bullish trajectory, holding key support levels at $2,521 and $1.38, respectively.

Will the Fed deliver the hawkishness markets are pricing in?

Fed hike bets increase after PPI and CPI reports. Updated dot plot to be crucial for the dollar’s reaction. Warsh’s independence faces test amid Trump’s pressure for lower rates. For the Dollar to extend gains, Fed needs to satisfy current hawkish bets.


Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight
The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.