One
of the most exciting events in Slovenia during last year was
when a group of young army recruits spat on the national flag
and sang the anthem of the now defunct former Yugoslavia.
They were sent to a military psychiatrist for observation.
Indeed, economically speaking, a preference for any other
part of the late Federation over Slovenia would indicate mental
deformity.
Slovenia is by far the most prosperous and
pacific of the lot. Income per capita increased by 7% between
1995-2000 and reached 75% of the EU's average. Yugoslavia
and Macedonia would require half a century to reach this level
at current growth rates. Slovenia's public debt is negligible
(c. 26% of GDP), its unemployment rate is almost American
(less than 7%), its budget deficit a mere 1.4% of GDP. Slovenia's
gross national savings is almost a quarter of its GDP - as
is its gross domestic investment (28%).
It is a respected member of both the World
Bank and the IMF. The former has disbursed c. $250 million
for purposes such as structural reforms and environmental
cleanups. The latter praises its monetary targeting, the managed
float of its tolar, and the lack of major (budget and current
account) imbalances. This, despite erratic monetary management
by the Bank of Slovenia, which, together with the introduction
of VAT, the oil price shock, and a totally CPI-indexed financial
environment, led to escalating inflation (c. 9% annually,
up from 6%).
Thus, should Slovenian officials fail in their
efforts to secure agricultural and regional development concessions
from their counterparts in Brussels, Slovenia runs the risk
of becoming a net creditor of the EU. Slovenia, contrary to
most other current members, is openly unhappy with the "Big
Bang" enlargement of the Union. It has successfully concluded
22 out 29 chapters to be agreed with the EU prior to accession
and it is afraid of being held back by an unrealistic, politically
motivated, process of enlargement which will stress the EU's
deficient institutions to their breaking point.
Slovenia is small. It is the size of pre-1967
Israel or New Jersey. With less than 2 million citizens (88%
of which are ethnic Slovene), its population grows by a paltry
0.14% p.a. Still, had it not constituted the northern boundary
of a war prone and unstable region, Slovenia might have attracted
more FDI (it has one of the lowest rates among the candidate
countries), bordering as it does and integrated as it is with
the (relatively) large and disinflated economies of Italy,
Hungary, and Austria. Many Slovenes actually live in Jorg
Haider's part of Austria (Carinthia).
Italians owned property (confiscated by the
communists) in Slovenia before the Second World War (the source
of a simmering grudge in Italy). Italians, Austrians, and
Germans invest in Slovenian banks, insurance companies, and
industry. Together with Poland, Hungary, and the Czech Republic
(among others), it is a member of the now reawakened CEFTA
(Central European Free Trade Agreement). Only 4% of Slovenia's
GDP derives from agriculture (vs. 61% from services). Still,
Slovenia, to its great ire, is often associated with the Balkan.
But the bad neighborhood is not the only obstacle.
Slovenia's privatization was as crony-infested as elsewhere
in the Eastern Bloc and its legislation still incorporates
investment-deterring anachronisms (restricted land and media
ownership, an over-regulated labour market, lack of corporate
governance).
Capital account liberalization was implemented
only recently. Close to half of the economy (including a chunk
of the favoritism-ridden and inefficient banking system) is
in the hands of the state. The private sector, though, is
thriving. Growth rates (4% this year) are double the European
average and GDP per capita is almost equal to Greece's or
Portugal's.
Slovenia's international trade amounts to
60% of its GDP. Two thirds of it is with the EU (half of this
with Germany and Austria, the former colonial mater). Its
trade with Russia, the USA (3% of the total each), and even
with other republics of the disintegrated Yugoslavia is marginal.
It still purchases raw materials from Macedonia and Yugoslavia
- and sells back to them the finished products (as it used
to do in former Yugoslavia). But this does not amount to much.
The decoupling is intentional - Slovenia considers
itself an integral part of Western Europe. All it inherited
from Communism, it feels, was polluted rivers and coastal
water, acid rain, and depleted forests. Still, such exposure
to the EU makes Slovenia susceptible to the Union's business
cycles. Shortsightedly perhaps, it does not have a trade representation
or an economic attaché in the USA.
Of all its erstwhile confederates, Slovenia
maintains tenuous political contacts only with Croatia. It
just resolved a long standing dispute with Croatia regarding
the Krsko nuclear power plant. Both countries agreed to continue
discussions regarding the final demarcation of the hotly disputed
(in Slovenia) border between the two countries as a prelude
to the introduction of the Schengen agreement.
Overtures are made to post-Milosevic Yugoslavia.
Slovene legislation is eagerly copied by Macedonia. Gradually,
albeit reluctantly, Slovenia comes to be regarded as a role
model by its southern neighbors who strive to emulate its
success.
basic
Slovenia information | Slovenia
- A Little Jewel | Slovenia
- Prosperous ? | Facts
about Slovenia |
Ljubljana
- capital of Slovenia | The
Property Market in Slovenia |
Buyer's
Guide | Why
buy property in Slovenia? |
Investment
Advice
|
