In 2020, the pandemic and the restrictive measures taken negatively affected the performance of the Slovenian economy, resulting in a 5.5% reduction in GDP. As a result of increased public consumption, there was a significant increase in public debt.
Economic recovery is tentatively expected in the 2nd quarter of 2021 thanks to the gradual improvement of epidemiological trends and vaccination coverage of the population, in the 2nd half of the year accelerated growth of economic activity can be expected, which is mainly a consequence of the minimal impact of the autumn wave of the covid-19 epidemic on the export economy and construction industry. However, the economic recovery will continue to be highly differentiated, growth will be recorded mainly in the manufacturing industry and the construction industry.
Relatively high growth is also expected for investments, especially in the area of infrastructure and housing construction. A gradual strengthening can be expected in private consumption as a result of an increase in disposable income and a decrease in the household savings rate. Trade exchange will also continue to grow, initially mainly for goods. On the other hand, the sector of services connected with congress and tourism will require the longest rehabilitation.
The average unemployment rate will remain approximately the same as in 2020, assuming that the government’s anti-crisis measures in the first half of this year will continue to mitigate the impact of the epidemic on the labor market and will be phased out gradually in line with current trends. After last year’s deflation, a gradual increase in prices can be expected in 2021, especially for energy products and food.
Apart from the outbreak of the covid-19 pandemic, the economic development of Slovenia was also affected by a change of government in March 2020. The new centre-right government has shown an interest in investing in sectors that have been underfunded so far, such as the defense industry, healthcare and the long-term care system.
To mitigate the impact of the pandemic, the Slovenian government has so far approved a total of eight packages of anti-crisis measures, and according to data from the Fiscal Council of the Republic of Slovenia from March 2021, a total of EUR billion was spent to combat the crisis. In the area of the economy, measures to preserve jobs are particularly key, i.e. waiting for work (standby) with salary compensation for employees up to 80-100% and subsidizing reduced working hours (kurzarbeit).
Other measures to support the economy include a universal monthly income for self-employed people, moratoriums on loans, a state guarantee scheme for bridging loans to ensure the liquidity of companies, financial compensation for fixed operating costs, state-subsidized value vouchers (vouchers) to support domestic tourism, contributions for the purchase of protective equipment and testing of employees, special financial compensation for transporters, refunds for the statutory increase in the minimum wage, etc.
In response to the covid-19 pandemic, the Slovenian government also approved an intervention law last year, the aim of which is to eliminate obstacles to the implementation of important investments in order to revive the economic cycle after the pandemic. On the basis of this law, it determined a list of 187 projects that it designated as important investments with a minimum value of EUR 5 million, and later supplemented this list with another 127 projects.
The aim is mainly to ensure the investment cycle of the state, municipalities and the private sector after the epidemic and to mitigate the negative effects on the economy by supporting the construction industry and related sectors (services, trade, transport, etc.). The law promises coordinated implementation of investments, shortening of deadlines and preferential treatment in case of administrative disputes.
An important investment is defined as an investment in accordance with the goals of national strategic policies and programs, especially in the field of transport, energy, the environment and regional development. The list includes both large strategic projects (e.g. the new Divača–Koper railway line, the 2nd unit of the Krško nuclear power plant, the Mokrice hydroelectric power plant, etc.), as well as smaller projects of local importance (flood protection, water pipes, rental apartments, student campus, infectious clinic, retirement homes, etc.)
Post-COVID-19 opportunities for foreign exporters
Transport industry and infrastructure
According to allcountrylist, a number of infrastructure projects aimed at the modernization and development of railway transport in accordance with the requirements of the trans-European transport network TEN-T are ongoing and will continue to be ongoing in Slovenia. The Intervention Act included in the list of important projects the modernization of the railway line Zidani Most – Celje (EUR 282 million), Maribor – Šentilj (EUR 28million), the Pragersko railway junction (EUR 89 million) and the Karavanky railway tunnel (78, EUR 6 million).
The new government has also decided to revive the Emonika project, the aim of which is to create a modern transport hub in the capital and consists in the comprehensive reconstruction of the train and bus stations with a total value of EUR 387.8 million. This year, the modernization of the Ljubljana-Divača railway corridor will also be tentatively started, which will be divided into several parts with a total value of EUR 67million, with complete implementation by 2030.
Items such as mechanical devices and devices for signalling, safety or for the control of railway and other transport as well as construction, reconstruction and engineering work are in demand. In accordance with the modernization of railway transport, Slovenian Railways is also changing the train sets for the transport of passengers.
In addition to rail transport, as part of the green transformation, emphasis will also be placed on other solutions that ensure sustainable mobility within road transport, e.g. intermodality within public transport, support for cycling, electromobility, etc.
In the area of road transport, in the period after the covid-19 epidemic, emphasis will be placed mainly on the construction of the 3rd development axis (work on the motorway network in the northern and partly also the southern part of the route), the expansion of some parts of the Ljubljana motorway bypass and the busiest sections of the A1 motorway near Ljubljana, the construction of local roads (Hotemež–Britof, Markovci–Gorišnica) and cycle paths (Brežice–Dobova, Velenje–Šoštanj–Mozirje, Celje–Šentjur).
In the field of energy, the intervention law considers the construction of the Mokrice hydroelectric plant a priority. The total value of the project is estimated at EUR 150 million, of which approximately half will be used for the energy part, the rest for the infrastructural part. The construction of the Vodice–Ljubljana and Ajdovščina–Lucija gas pipelines is also planned.
As part of the electricity transmission system, the intervention law mentions in particular the construction of the Cirkovce–Pince, Kamnik–Visoko, Gorica–Divača long-distance line, the Dobruška Vas substation and the cable line in Koper. The mentioned projects are an opportunity not only for construction companies, but also for subcontractors of equipment and equipment for hydroelectric power plants, gas pipelines and electricity distribution systems.
The new Slovenian government is positive about the use of nuclear energy, which it perceives as low-emission, and supports the construction of the second block of the Krško nuclear power plant with a reactor output of between 1 and GW. The project is in the preparatory phase and will be an opportunity for the exchange of experience and know-how in the field of nuclear energy.
The covid-19 pandemic pointed out the necessity of being present and functioning in the virtual world, revealed the weaknesses of existing systems and accelerated the previously announced digitization of work processes across all sectors. Slovenia will strive for the further improvement of e-government, e-health, e-commerce systems and the expansion of the offer of online services, it will also pay increased attention to cyber security and the issue of personal data protection.
Online shopping has seen significant growth during the pandemic. In the future, a significant advantage is expected for merchants who will be able to offer customers a combination of brick-and-mortar stores and online services. Therefore, sellers will continue to look for e-commerce platforms and especially innovative technologies that will be aimed at improving the shopping process for consumers (eg video shopping).
Current trends show that even after the end of the state of emergency, many public and private entities will retain home offices to some extent, or a combination of the classic work process and work from home. Therefore, it can be assumed that there will be a demand especially for remote access software and the associated challenges of the hybrid workflow will also exist in the future.
The Slovenian government seeks to change the defense legislation and increase the defense budget, especially in order to carry out the necessary modernization of the armed forces. In the next six years, the Ministry of Defense of the Republic of Slovenia plans to invest EUR 780 million in equipping the Slovenian army. The Slovenian market is mature and oriented towards modern technologies, precise processing, interoperability, modularity, multi-purpose technologies and reliability of business partners.
It thus represents an opportunity for the Czech defense industry to apply products and services with high added value and to use knowledge of modern technologies and procedures. Products such as armored and transport vehicles, technologies for neutralizing explosive devices, weapons and ammunition, mortars, artillery systems, airplanes, helicopters, unmanned and remote control systems for data collection purposes, long and short range radars, etc. are in particular demand.
After a partial slowdown in public investment in residential construction in recent years, Slovenia’s new government is promising a series of housing projects for both commercial and rental purposes, with the capital Ljubljana in particular struggling with a chronic housing shortage. In addition to Ljubljana (Podutik, Jesihov Štradon, Zelena Jama, Litijska, Rakova Jelša II), residential complexes will also be built in Maribor (Pod Pekrsko Gorco, Novo Pobrežje) and Kranj.
Czech companies will be able to participate in the construction, or supply building materials, reinforced concrete structures, building joinery and carpentry products and interior and exterior equipment.
Healthcare and pharmaceutical industry
The covid-19 epidemic has particularly revealed the weaknesses of the healthcare and long-term care system, therefore, as part of the preparation of the National Recovery and Resilience Plan, Slovenia plans to invest in the infectious disease monitoring system and create a mechanism for the effective management of future epidemics, build sanatoria for long-term patients in all regions, reconstruct infectious clinics in Ljubljana and Maribor or the construction of new homes for the elderly.
In addition to ICT developers and construction companies, suppliers of furniture or specialized medical and rehabilitation equipment will also get the opportunity.
The financial results of the largest Slovenian pharmacy wholesalers show that the sale of medicines and food supplements increased exceptionally in 2020, so it can be expected that interest in these product categories will also grow within the framework of health care and prevention. In particular, vitamin D has gained popularity for strengthening the immune system in combination with vitamin C and mineral elements such as zinc and selenium.
Even after the end of the covid-19 epidemic, it can be expected that many measures to prevent the spread of infection in the public will remain in force, for example the mandatory wearing of masks in public closed spaces and in general in all closed spaces with a large concentration of people in which it is not possible to ensure the appropriate distance (1.5–2 m) between persons; mandatory disinfection of hands before entering these premises, etc. Also, all operations in which people move will continue to be required to strictly adhere to a stricter hygiene regime (more frequent cleaning, disinfection).
The Slovenian authorities point out that these measures will be in force for a longer period of time following the success of vaccination and its effectiveness in relation to new strains of covid-19, therefore it can be expected that the demand for protective equipment for the public and the needs of the economy will continue to be relevant. The challenge for the future will also be effective disinfection of premises (hospitals, educational facilities, offices, hotels, catering establishments, etc.) with minimal impact on human health.