Slovenia's economy will expand by 4% annually in 2005 and 2006, according to the World Economic Outlook, a report released on Wednesday by the International Monetary Fund. 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, but reducing inflation to the Maastricht criterion level and maintaining competitiveness, including through 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.
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