(Updates with comment in third paragraph, inflation estimate in sixth paragraph.)
Jan. 26 (Bloomberg) -- Slovenia’s economy will grow 0.2 percent this year before expanding at a 2 percent pace in 2013 as the debt crisis in Europe saps demand for its exports.
The economy was forecast to grow 2 percent this year and 2.5 percent in 2013 in an estimate made last year, the government’s forecasting institute in the capital Ljubljana said in an e-mailed statement today. Gross domestic product probably expanded 0.5 percent last year, down from a 1.5 percent estimate in the previous report, the institute said.
“Expectations about growth from our last report have deteriorated significantly,” the institute said. “The situation in the international financial markets has worsened, shown by increased borrowing costs and more difficult access to funding by countries and companies.”
Slovenia’s economy is sliding into recession as austerity measures by European nations striving to cut their debt load cut demand for its exported goods. Economic output of the first post-communist nation to adopt the euro in 2007 shrank 0.5 percent in the third quarter last year from a year earlier.
The former Yugoslav nation has been without an official government since Borut Pahor’s Cabinet was toppled in a September no-confidence motion. Janez Jansa, whose party came second in a snap vote last month, has secured 50 votes in the 90-member assembly to be confirmed as premier at a session on Jan. 28.
Jansa pledged to cut spending by about 800 million euros ($1.05 billion) to allay investors’ concern over the country’s public debt, which more than doubled since the euro adoption five years ago.
Inflation is estimated at 1.8 percent by the end of this year and at the same level at the end of 2013, the institute said. Its forecasts are used by the government to plan budget spending. Slovenia’s current budget gap is estimated at about 6 percent, according to central bank Governor Marko Kranjec.
The institute’s estimate compares with a forecast of a 1.1 percent contraction by the European Bank for Reconstruction and Development in a Jan. 24 report.
--Editors: Elizabeth Konstantinova, Douglas Lytle
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