Referendum outcome key for the coalition
Overview:
For all its high per capita income and strong manufacturing base, the Slovenian economy was still hard hit by the global economic recession. With its key export market - the EU – struggling and the supply of credit suddenly restricted the economy contracted sharply last year. While economic recovery is clearly underway it remains fragile. Weak domestic demand has, at least, helped to reduce growing external account imbalances. Fiscal policy has played a key role in reducing the impact of the downturn. While the public debt to GDP ratio is low it is rising quickly, outlining the need for medium-term fiscal consolidation. The recession has led to a sharp rise in unemployment. Political scandals and the referendum on submitting the border dispute with Croatia to arbitration could also destabilize the ruling coalition.