LJUBLJANA (Slovenia), April 7 (SeeNews) – Fitch Ratings said it has revised the outlook on Slovenia’s long-term foreign-currency issuer default rating to positive from stable and affirmed the rating at ‘A’.
“Fiscal outperformance has persisted, with Slovenia achieving a general government primary fiscal surplus of 0.4% of GDP in 2024 and an overall deficit of 0.9%,” Fitch Ratings said in a press release on Friday.
This is well below Fitch’s 2.4% previous overall deficit forecast and the government’s 2.9% target, reflecting stronger revenue performance and the weaker-than-planned execution of flood-related capex.
Fitch projects the deficit at 1.6% in 2025 and 1.5% in 2026, factoring in higher defence spending and lower than expected flood-related capex.
“We assume defence spending will rise from 1.3% in 2024 to 2% of GDP (NATO definition) by 2027, rising to 2.5% in the long term,” it added. Despite higher spending, Fitch’s deficit forecast is more favourable than at the previous review, supported by stronger underlying performance.
Slovenia’s general government debt to GDP fell to 67.0% in 2024, declining for the fourth year and nearing the pre-pandemic level (2019: 66.0%). Fitch forecasts debt will fall to 63.5% by end-2026, driven by a strong fiscal position and stable growth.
Real GDP grew 1.6% in 2024, down from 2.1% in 2023, but picked up in the second half. Fitch expects 2.2% growth in 2025 and 2.4% in 2026, driven by resilient income, strong jobs, external demand recovery, and investment—including flood reconstruction and EU-funded projects. Risks include global trade tensions, weak external demand, flood-related spending, and labour shortages.
Fitch said Slovenia has shown resilience to external shocks despite its small, open economy. By late 2024, real GDP was 10.5% above pre-pandemic levels. Moderate wage growth kept real exchange rate gains below those of peers, while export market share rose 27% since 2021 and 38% since before the pandemic. HICP inflation averaged 1.1% in H2 2024 and 1.9% in February 2025, among the lowest in the EU. Core inflation fell to 2.0% at end-2024. Fitch forecasts average inflation of 2.0% in 2025 and 2.3% in 2026.