Two neighbouring, Adriatic, former-Yugoslav states, both now members of the EU: one is continuing a remarkable recovery from a banking crisis, the other showing glimmers of a revival after a full six years without growth.
Slovenia’s economy grew by 2.6 per cent last year; Croatia’s shrank by 0.4 per cent. The growth gap between them should narrow this year, with Slovenia’s economy slowing and Croatia’s at last picking up to leave the worst years behind. Croatia will benefit from rising exports and increasing European Union funding, while Slovenia’s export growth slows and an EU cash injection tapers. Nonetheless, as the countries enter the second half of the decade, Slovenia looks likely to set the pace, with its southern neighbour still a laggard. Read more
Might another unlikely partnership with a growing Gulf airline save a second ailing national carrier in south east Europe? Slovenia appears to hope so, as it has reportedly offered Qatar Airways a stake in Adria Airways, which the Ljubljana government is lining up for privatisation. The prospect of a Qatari takeover is tenuous, not least due to the Slovenian airline’s difficulties. But the offer is nonetheless intriguing as it highlights both growing interest from non-European carriers in European aviation and the progress of Slovenia’s privatisation programme. Read more
First quarter GDP figures from Croatia and Slovenia show that the former continues to slide backwards, albeit at a slower rate, while the latter continues its export-led recovery.
Croatia’s economy has not shown meaningful growth since 2008 and remains lumbered with structural problems that the government seems barely able to address. It shrank again in the first quarter, by 0.4 per cent, having contracted by 1.2 per cent in the last quarter of 2013. Read more
After a week of will-she, won’t-she, Alenka Bratusek, Slovenia’s prime minister, resigned on Monday. Her departure looks certain to trigger an election just as the country seemed to be returning to a more stable footing following its banking and fiscal crisis.
Bratusek’s resignation raises several questions. When will the election happen? What will happen between now and then? What is the likely political outcome? And what are the prospects for Slovenia’s privatisation and reform programmes? Read more
It's goodbye from Bratusek
Just as all seemed to be going rather well, Slovenia has been thrown into uncertainty again by a palace coup and a likely snap election. Will investors now back away from the Slovenian bonds they have been hoovering up with such alacrity this year?
On April 29, Alenka Bratusek, the embattled prime minister, said she would stand aside for early elections she wants held before July after losing the leadership of her left-of-centre Positive Slovenia (PS) party. Read more
In the years before the crisis, Slovenia was touted as the Switzerland of eastern Europe, praised for its robust export-oriented economy, sizeable banking sector and hard-working citizenry, as well as its stunning Alpine scenery. Then the crash came and its banks racked up multi-billion euro shortfalls, exports plunged and allegations of graft started to surface. By 2013, this tiny former Yugoslav state was “the next Cyprus”, in line for an EU-IMF bailout and a possible eurozone exit.
Now it has bounced back again and on April 1, Slovenia issued a €2m tranche of bonds on the international markets, marking the fastest pace of debt issuance in its short history and ensuring it has more than enough funds for its full-year 2014 financing needs. Read more
By Sašo Stanovnik of Alta Invest
Just one year ago, after public protests and a corruption scandal had brought down Slovenia’s centre-right government, a little-known former civil servant stepped to the fore. To the surprise of many, Alenka Bratušek successfully concluded negotiations to form a centre-left coalition, becoming the first woman prime minister of Slovenia in the process.
It was a brave – or possibly foolhardy – act. Read more
Slovenia finished February on a surprise high, with news that the economy in the fourth quarter of 2013 expanded by 2.1 per cent year-on-year – the first three months of growth after eight consecutive quarterly declines.
The late upturn, however, proved insufficient to pull the year’s performance into positive territory. Grim data earlier in the year – the first three months was 4.6 per cent down on 2012 – meant the economy in 2013 contracted by 1.1 per cent. Still, that’s a whole lot better than the 2.5 per cent slump in output for 2012. Read more
Finance Minister Uros Cufer
Slovenia is set to join a regional rush to the bond markets as it seeks to borrow €3.5bn, equivalent to around 10 per cent of its annual GDP, this year. The government announced that it would raise the cash largely through “long-term borrowing through issuing sovereign bonds”, with some short-term local notes also likely to be issued.
The statement raised the possibility of using the funds to help finance a €4.8bn bank bailout announced in December, which includes a €3.2bn recapitalisation programme. The government is confident that this can be met without resorting to an international bailout of the sort that has placed severe strictures on other eurozone countries such as Greece and Portugal. Read more
Slovenia is no longer the Switzerland of Eastern Europe – but perhaps not the Cyprus or Ireland, either.
Slovenia’s government is confident that it can now dodge the bullet of an international bailout, announcing on Thursday that it would be able to cover a whopping €3bn recapitalisation of its troubled banks from its own resources, despite that sum totalling nearly 10 per cent of GDP. While the announcement has been made with a palpable sense of relief in the tiny eurozone country, questions remain about implementation – and whether the absence of international pressure will allow Slovenia to stall on much-needed reforms. Read more
Croatia’s accession to the European Union on July 1 may have been hugely significant for a country putting years of Communist dictatorship and subsequent war behind it. But its first three months of membership have been characterised by economic decline, rather than the hoped-for resurgence. And the immediate outlook is not much sunnier. Read more
By Ben Aris of bne
Despite its current financial woes, Slovenia is the most prosperous country in Emerging Europe, according to the latest annual prosperity index from the Legatum Institute. Armenia comes in last.
While income is an important part of prosperity, the institute has broadened the definition to take into account of some of the non-material things that make life worth living, as defined in sub-indices such as “Safety & Security”, “Personal Freedom”, “Social Capital”, “Education”, among others. Read more
By Jean-Marc Peterschmitt of the EBRD
Slovenia is facing its most serious economic crisis since it joined the European Union in 2004 – a crisis that has shattered previous convictions and conventions about how the country ran its economy. This is welcome. Even more welcome is the determination of the current government to implement decisive measures that aim to put the country on a path of sustainable and stable growth. Read more
The court verdict that this week found Janez Jansa, the former prime minister, guilty of accepting bribes in the long-running “Patria” procurement scandal surprised many and has further polarised the Slovene population.
For many outside observers, including European Union officials, it was a step in the country’s much-needed fight against corruption. But for Jansa’s conservative faithful, it was a shock – as shown in this video where one ardent supporter outside the courthouse castigates the “crazy judges”.
But will the verdict make any difference to the practical ethics of doing business in Slovenia? Read more
Slovenia’s former prime minister has been found guilty of taking bribes in a €278m arms deal in the biggest case of alleged corruption to surface in the troubled ex-Yugoslav republic.
Janez Jansa follows two other former premiers in the south east Europe to be convicted of financial wrongdoing, the ex-leaders of Croatia and Romania. Meanwhile in Serbia, the country’s richest businessman was arrested late last year for alleged embezzlement. A long-run campaign by the EU against corruption in its present and future new member states may finally be producing results. Read more
It was glum faces in Slovenia last week: not only was it the coldest May since the 1970s, but the month ended with news that the economy had slumped a shocking 4.8 per cent in the first quarter.
What to do? Well, successive governments in Ljubljana have insisted they are working hard to support small business, especially start-ups, to boost the economy and employment. Sounds good but, alas, Slovenes at the coal face tell a different tale. Take Vasja Golar, aged 29, from the small, north-east town of Gornja Radgona. Read more
Question: What’s the link between a national airline, a global-brand ski factory and an organic flour producer?
Answer: none at all, except in Slovenia, where any half-aware citizen would immediately recognise them as state-owned companies being prepared for privatisation to raise the cash to bail out Slovenia’s heavily indebted banks and balance the national budget. Read more
By Dalibor Rohac of the Cato Institute
Slovenia, once celebrated as the poster boy of central and eastern Europe, is now widely perceived as yet another sick man of the eurozone. With bond yields close to those of Portugal and a Moody’s downgrade for one of the country’s largest banks, rumors of an imminent bailout abound — though vehemently denied by Alenka Bratušek, Slovenia’s prime minister.
To solve their problems, Slovenians should look north, as their woes resemble the afflictions facing the Baltic states only four years ago. Read more