Ljubljana, 17 June 2025 - The European Commission has already downgraded Slovenia's economic growth forecast for this year from 2.5% to 2.0% in May, and the Bank of Slovenia lowered it from 2.2% to 1.3% a few days ago. In the IMD competitiveness rankings published today, Slovenia has maintained its ranking of 46th from last year. However, this is Slovenia's lowest ranking in the last five years. Representatives of "Gospodarski krog", which brings together 17 business associations, therefore stress the need for measures to boost innovation, speed up digital and green transformation, relieve the tax burden on labour, remove bureaucratic obstacles, and improve the management of public services. Boosting the capital market, attracting foreign investment, and a stable regulatory environment are also key. A long-term strategy is needed to raise competitiveness, upgrade the pension system, and better manage domestic capital. Strengthening economic resilience, including food and energy sovereignty, is also a priority. Business representatives also stressed the need to develop a new long-term strategy to boost international competitiveness and to involve business more in policy-making.

The key challenges continue to include low productivity, high tax burdens on labor, energy uncertainty, rigid labor legislation, administrative complexity, and a shortage of labor.

On behalf of "Gospodarski krog", representatives of the Chamber of Commerce and Industry of Slovenia (GZS), the Chamber of Craft and Small Business of Slovenia (OZS), the Slovenian Chamber of Commerce (TZS), and the Slovenian-German Chamber of Commerce presented the current state of the economy.

"At GZS, we have consistently pointed out and made proposals on how to improve the business environment in the key operational areas of companies where we are clearly not competitive, as the IMD Competitiveness Ranking once again confirms," said Tibor Šimonka, President of the Chamber of Commerce and Industry of Slovenia, and added: "If for the second consecutive year we fail to achieve Slovenia’s expected economic growth of 2 to 2.5%, these will be two lost years that we will not be able to recover." To enhance competitiveness, he proposed five sets of measures. In terms of taxes and contributions, labor should be relieved—short-term through the gradual introduction of long-term care contributions and by establishing more favorable tax treatment of cross-border service provision. Both for businesses and employees, the tax burden must be reduced in the long run.

He continued: "Following the example of other European countries, we urge the government to prepare measures to mitigate energy prices, at least for energy-intensive companies in the materials industry. In the area of economic investment, we need to strengthen investments in the business sector, especially in intangible assets and in transport, communication, and energy infrastructure. We must accelerate the digital transition, improve innovation efficiency, and enhance the quality of public services by introducing modern methods of human resource management and rewarding. We urge the government to reduce excessive bureaucracy and to expedite lengthy procedures for spatial planning, various permits, and the employment of foreigners. In the labor market, we propose measures to increase the motivation of the unemployed to return to work, encourage the extension of work activity among older people who are able and willing to work more, and speed up the hiring procedures for foreigners where there is a shortage of domestic workers."

Blaž Cvar, President of the Chamber of Craft and Small Business of Slovenia, added: "Given all the burdens, both financial and administrative, we have witnessed over the past year, the seven-place drop in the domestic economy segment on the IMD ranking comes as no surprise. Out of 69 countries, we are at the bottom in terms of labor legislation and low attractiveness for foreign investors. There is also a sharp decline in the construction sector, which can be attributed to complicated and time-consuming bureaucratic procedures." The fact that Slovenia did not improve on the IMD ranking means, as he emphasized, "we failed to take advantage of our competitive advantages. When pointing out the decline in competitiveness of the Slovenian economy, we also have to consider forecasts by other independent institutions. We are facing the largest drop in GDP among all EU countries, and the Bank of Slovenia has recently downgraded its economic growth forecast from 2.2% to 1.3%. The uncertain conditions are most evident in declining investment activity in both industry and construction, in the decrease in exports, and in the increased pessimism among consumers—something that craftsmen and entrepreneurs in the service sectors are also feeling."

Mariča Lah, President of the Slovenian Chamber of Commerce, highlighted: "Slovenia’s economic indicators show that we have completely neglected the economic aspect of development, something the IMD Competitiveness Ranking once again warns us about this year. Slovenia has fallen drastically by 8 places over the past two years. In addition, this year we are also witnessing a decline in economic growth, meaning it is high time for the government to change its economic policy and shift it in a positive direction. In the economy, we are seeing slower export growth, stagnating productivity and private investment, businesses relocating abroad, and despite wage growth, private consumption remains at the real level of 2021 due to consumer caution and uncertainty." She added that we must "focus development efforts on a high-quality and stable legislative framework by removing numerous bureaucratic barriers for businesses, establishing a predictable tax system that does not negatively affect competitiveness, and reducing the outflow of purchasing power abroad. We must eliminate state overregulation to ensure the smooth functioning of the EU internal market. A dialogue with the business sector is also essential."

Dagmar von Bohnstein, President of the Slovenian-German Chamber of Commerce, stressed: "Slovenia is highly rated as a business location with effective digital infrastructure and an innovation-friendly environment. However, due to chronic locational shortcomings, it risks losing its appeal. In areas of longstanding weaknesses, such as high tax burdens, inefficient public administration, rigid labor laws, and the predictability of economic policy, no improvements have been observed."

Decline in Manufacturing and Industrial Production

Bojan Ivanc, Chief Economist at GZS, noted that neighboring Austria maintained 26th place, Hungary improved by 6 places, while Italy and Croatia slightly worsened their previous rankings. Germany, Slovenia’s most important foreign trade partner, improved its position by 5 places and ranked 19th. "Among the top 10 countries, most are small states, which means that high rankings depend primarily on domestic conditions controlled by national policies. The IMD ranking reflects most clearly the performance of export-competitive sectors, especially manufacturing," he explained.

Slovenia’s industrial production data shows it has been weak since the start of the energy crisis in 2022, and continues to lag behind the EU-27 average. Compared to the 2021 average level, in April this year, Slovenia’s industrial output was 1.6% lower, while the EU-27 average was 3.3% higher. Unlike the EU-27, where industrial production slightly increased in the last quarter, it declined further in Slovenia.

Regarding corporate profits, which are often cited in public debates, Ivanc clarified: "Data from annual reports of companies in the manufacturing sector show that real sales dropped by 1.5% last year, value added rose by only 0.4% in real terms, while the sharp rise in labor costs caused a 3.3% real decrease in EBITDA. At the same time, real income tax payments increased by 18%, while net profit dropped by one-sixth. This marks the second consecutive annual decline, making it the lowest level since 2020."
Over the past 12 months, industrial production stagnated, with sharp declines in nine sectors, particularly in complex machinery, automotive, construction, and labor-intensive industries. The only increases were in electrical devices, clothing, metals, and chemical products—the latter two also benefiting from a strong rebound after major cutbacks during the energy crisis peak.

"The sentiment indicator in manufacturing did not improve in May and was lower than the EU-27 average, suggesting no recovery in the second quarter of this year. The GDP drop in Q1 is largely due to a decline in manufacturing, where real value added fell by 2.5%. If another weak quarter follows, this could lead to increased borrowing costs and a budget revision, as tax revenues tied to economic activity would fall short of current expectations," he concluded.

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Luka Vesnaver, President of the British-Slovenian Chamber of Commerce, stated: "At the British-Slovenian Chamber of Commerce, we expect targeted measures from the (still current) government to improve the business environment in Slovenia, with a focus on attracting foreign investors who will bring highly qualified jobs and expertise to the country (in industries beyond just pharmaceuticals). Achieving this goal requires measures primarily aimed at a complete overhaul of the wage system, including a reduction of the personal income tax burden, and taxation on bonuses and stock options. At the same time, a digital transformation of the public administration is essential, as well as the introduction of a mandatory second pillar in the pension reform, which would boost the capital market and support investments in domestic, including start-up, companies."

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Slovenia on the IMD Competitiveness Ranking

Slovenia managed to maintain its position in economic performance due to employment growth, increased purchasing power of the population, and improved assessment of resilience to economic cycles. On the other hand, it lost ground due to low GDP growth, a decline in investments and construction, and low levels of international investment. In the area of government efficiency, the loss of two positions reflected a higher risk of tax evasion, an uncompetitive tax policy, concerns about the sustainability of the pension system, and weak efficiency in public finance management. Slovenia also declined in the area of business legislation.

On the positive side, the public finance deficit was lower, and Slovenia improved its scores in both the Sustainable Development Goals Index and the Democracy Index. In terms of business efficiency, Slovenia advanced due to increased productivity and efficiency, and greater responsiveness of companies to environmental opportunities. Weaknesses were seen in managers’ perceptions regarding values and relationships, a poor understanding of the need for economic reforms, and limited access to qualified foreign employees.

In infrastructure, Slovenia dropped two places due to declining cybersecurity, inadequate legislation for supporting and developing technology, and insufficient funding for high-tech development. Air transport quality remains weak, electricity costs for industrial users are too high, and research equipment is outdated.