Page 78 - SE Outlook Regions 2023

2.11.3 Inflation and monetary policy

The International Monetary Fund IMF sees inflation of 5.1% in 2023,
versus 8.9% in 2022. The IMF predicts that Slovenia’s inflation could
also remain high for longer, which can trigger higher wages and higher
inflation expectations, which would in turn require a tighter policy
stance. Other risks include a possible correction in real estate prices,
which are seen as overvalued. Upside risks include a possible
continued reduction in energy prices, and a stronger-than-expected
tourism rebound.

Over the medium term, growth is expected to rebound to its potential of
around 3% per year.

According to OECD, the labour market will remain tight, contributing to
stronger wage growth. This, together with high energy and food prices,
will keep headline inflation elevated. Only in 2024 will growth pick up as
foreign demand recovers and headline inflation slowly recedes,
reflecting declining domestic demand pressures on the back of fiscal
tightening.

The Organisation for Economic Co-operation and Development (OECD)
expects harmonised index of consumer prices (HICP) inflation of 7.5%
in 2023 down from 9.2% in 2022.

2.11.4 Industrial production

In the first ten months of 2022, industrial production rose by 3.2% y/y. In
the mining and quarrying and in the manufacturing sector it grew by
12.1% y/y and 5.8% y/y respectively in the period under review, while in
the utilities sector it dropped by 24.4% y/y.

Industrial production started to show signs of a major slowdown in
February 2022 when it declined by 1.2% y/y, reversing a 9.9% increase
in January 2022. The biggest increase this year was recorded in August
of 4.8% while in the other months it has been moving in the range of

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