The economy is a quite complicated topic to tell in simple words, especially the economies of entire countries. Even small ones obtain so many variables to consider in this sphere in order to have a full picture of what’s going on there. However, in this article, we will try to explain the economy of Slovenia to everybody.
The last data (2019) shows that Slovenia’s nominal gross domestic product is 54.154 billion US dollars. On the other hand, its GDP (PPP) per capita is 38,506 international dollars. That makes Slovenia the wealthiest country among other Slavic ones.
First of all, before diving into Slovenia’s economy, let’s recall the school program of the basic economy and refresh in mind its fundamental principles for better understanding further information.
What is the Gross Domestic Product?
We can hear the abbreviation GDP at least once per week for sure, during news watching, internet surfing, or even in issues related to job activity. However, it is less important for us, rather than for governments of countries or big business corporations.
GDP is the total value (monetary or market) of all the goods produced within the borders of a country in a particular period of time, usually a year. GDP is useful if we want to know about the size of a country’s economy and its growth rate.
On the other hand, the countries are different. They have different sizes, geographic locations, neighbors, and other factors that can influence their economy and, thus, the general production of goods. Therefore, in order to evaluate a country’s economy fairly, specialists in this field decided to divide this rate among the population.
Hence, we got GDP per capita. This is the basic gross domestic product divided by the country’s total population. As overall GDP does not always accurately show how prosperous a country is, GDP per capita regulates this rate for the average person. People are one of the main powers of a country. Moreover, the economy of a country is led by people, not by products. This factor makes it a good measurement of a country’s standard of living.
For example, as for 2019, the GDP of the United States of America was 20.6 trillion dollars, the GDP of China was 27.31 trillion dollars, and the GDP of the entire European Union was 22.7 trillion dollars. From this information, we can understand that China produced the largest amount of products. However, if we divide those numbers into the population of every territory, we will get GDP per capita of $65,240 for the USA, $19,098 for China, and $43,206 for a European citizen. For sure, the population of China is three times larger than the European one, and five times bigger than American.
On the other hand, even this rate is not the most precise one if we want to know about the standards of living in a country. For sure, you can buy the same good for different prices in different countries. This is defined by a number of factors. The most significant one is the difference in currencies. For instance, you can buy a shirt in Germany for 15 euros, and an identical shirt in Slovenia for 10 euros. Therefore, for every euro spent on a good in Slovenia, it takes 1.5 euro to obtain the same product in Germany.
In order to facilitate calculations in terms of living standards, economists created GDP purchasing power parity (PPP). This rate considers various factors inside a country’s economy and provides more clear numbers to compare not only standards of living between countries but also economic productivity of them.
While calculating GDP PPP, experts consider factors of purchasing ability in each of the countries, therefore it gives a considerably clear picture of where life is better. However, GDP PPP did not include transport costs, tax differences, government interventions into the market, non-traded services, and market competition. Thus, it is not the ideal way to compare countries, but still better than just GDP.
GDP of Slovenia
In general, Slovenia enjoys a high level of stability and prosperity. Its economy is developed, and the country’s GDP is above average in Europe. Moreover, the purchasing power parity here is at 83% of the EU28 average. Slovenia is the richest of all other Slavic countries so far.
As for 2019, the nominal GDP in the country is 54.154 billion US dollars. As for such a small country with its population (Slovenia has 20,271 km2 of total area and almost 2,1 million of the population), this is quite a good point. The closest European countries with such numbers are Lithuania, Croatia, and Serbia, which have three times larger territories.
If we consider GDP (PPP) per capita, the situation becomes even better because Slovenia overtakes such countries as Spain, Portugal, Estonia, Poland, and all the rest of the Balkans, including Greece. Thus, the GDP (PPP) per capita of the Republic of Slovenia is 38,506 international dollars, as of 2020. This estimation ranks the country higher than the average among other European states.
Economy of Slovenia
The country’s economy is highly developed because of several reasons. Among them, there is an educated workforce, the country’s location at a major transport crossroads, a well-developed infrastructure, and many others. Back in Yugoslavia, it was the most productive and the richest of the Yugoslav republics, despite the fact that it took only one-eleventh of Yugoslavia’s total population, having one-fifth of its GDP and one-third of Yugoslavia’s exports. Thus, when Slovenia became independent, it entered the European market already with a considerably prosperous economy and relatively strong market ties to the West.
Soon enough, Slovenia entered the European Union and became the first country of the 2004 European Union enlargement to adopt the Euro currency. Moreover, Slovenia is a founding member of the World Trade Organization, joined the Central European Free Trade Agreement (CEFTA) in 1996.
The country is mainly trade oriented at such countries as Germany, Austria, Italy, and France. Here you can see the main export partners and their parts:
- Germany 18.9%
- Italy 11.6%
- Croatia 8.6%
- Austria 6.8%
- Switzerland 6.7%
- France 5.5%
Slovenia’s usual export goods are manufactured goods, machinery and transport equipment, food, chemicals. On the other side, it has strong economic ties with all its neighbors. Her mains import partners are
- Germany 16.1%
- Italy 14.0%
- Austria 10.0%
- Switzerland 8.5%
- Croatia 5.0%
- Hungary 3.6%
The basic import goods are machinery and transport equipment, chemicals, fuels and lubricants, manufactured goods, food.
The traditional Slovenian industries are agriculture, forestry, and fishing. However now, they comprise only 2.5% of the total country’s GDP and engage 6% of the population. Now, the main economic milestones of the country are services, industry, tourism, and foreign investments. To be more precise, less than 2/3 of people are employed in services, and more than 1/3 in industry and construction. The foreign investments take 24.7% of the GDP of Slovenia. The main investors are Austria (33.6%), Switzerland (11.3%), Germany (10.4%), Italy (7.9%), and Croatia (7.7%).
The economically wealthiest regions are Central Slovenia, the region that includes Ljubljana, the capital city, and such western Slovenian regions as Goriška and Coastal–Karst.
Slovenia and Euro Relation
As we mentioned above, Slovenia is a member of the EU, WTO, OECD. Those organizations positively influence the country’s economy. Moreover, it is dependent on its neighbors. This makes the economy open and independent but extremely sensitive to economic conditions inside main trade partners and the entire European Union.
On the other side, adopting the Euro currency created a lot of benefits for the political and social life of Slovenia. Moreover, each citizen can feel this comfort while paying in Euro in other European countries. Also, Euro is one of the most stable currencies in the world, thus there is a very low possibility for it to convert into nothing in several hours, which happened with many currencies throughout history.
You can even find Slovenia variations of Euro coins in your wallet. For example, the €0.01 coin has an image of a stork taken from a 0.20 tolar coin. At the coin, €0.05, there is Ivan Grohar painting The Sower sowing stars. Jože Plečnik proposed an idea to depict the national parliament on €0.10. On €0.20, there is a pair of Lipizzaner horses with the inscription. Triglav, the main symbol of Slovenia, is imaged on €0.50. The one Euro coin shows Primož Trubar, a Slovenian Protestant reformer. The two Euros coins are the place for France Prešeren, Slovenian Romantic poet, and the first line of the Slovenian national anthem, written by himself.
Slovenia is an interesting country in general. Its geographical location, culture, history, everything led to the situation it has now. The country is a part of the European Union, the wealthiest Slavic country, and the first green travel destination of Europe.
Thus, the economy of Slovenia is strong and connected to their neighbors as well as to all the rest of Europe. The country produces goods for export, attracts foreign investments, and develops the tourism sphere in order to show to most of the people how beautiful Slovenia is.