One of the founding members of the World Trade Organization (WTO), the country of Slovenia is a rising economy that has seen some recent setbacks due to the world economic crisis. During the era of the Soviet Union, Slovenia was a part of the Yugoslavian republics, where it enjoyed the prominence of being one of its top producers, generating 1/5th of the total GDP and providing 1/3rd of it exports. After gaining independence, Slovenia rapidly adopted privatization and since then the economy of Slovenia has been progressing.
Before the collapse of the Soviet Union, Slovenia was already better off economically than most of the other soviet territories and enjoyed prosperous trade relations with the West. Since then, they have been aggressively pursuing a policy of integration into the world economy. The Slovenian government entered into the Central European Free Trade Agreement (CEFTA) in 1996, the European Union (EU) in May of 2004, and the European Exchange Rate Mechanism in 2004 and adopted the euro as currency in 2007. In 2007, Slovenia was officially considered an “advanced economy” and in 2008 boasted a GDP equaling 91% of the EU average.
Though Slovenia was a rising economy, it has experienced several setbacks due to the world debt crisis, including the largest economic contraction in the EU. It has also experienced one of the worst GDP shrinkages and a rising national debt which is pushing beyond the EU’s limitations. Slovenia’s highly integrated trade ties with the rest of the EU have made it extremely vulnerable to economic conditions in the other countries.
Some hope for this country looms in the distance, however. Increased government investment to promote economic activity and a movement away from traditional industry and towards mid- and high-tech manufacturing may alleviate many of Slovenia’s economic woes. Also, neighboring Croatia has shown interest in investing in the economy of Slovenia, a relationship which may be the key to economic recovery and future prosperity for both countries.