slovenia-2015-return-to-stronger-growth
TRANSCRIPT
www.oecd.org/eco/surveys/economic-survey-slovenia.htm
2015 OECD ECONOMIC SURVEY OF SLOVENIA
Return to stronger growthLjubljana, Monday 4th May 2015
OECD
OECD Economics
2
Well-being is high
1. Each well-being dimension is measured by one to four indicators from the OECD Better Life Index set. Normalised indicators are averaged with equal weights. Indicators are normalised to range between 10 (best) and 0 (worst) according to the following formula: (indicator value - minimum value) / (maximum value - minimum value) x 10.Source: OECD (2014), OECD Better Life Index, www.oecdbetterlifeindex.org.
Income and wealth
Jobs and earnings
Housing
Work and life balance
Health status
Education and skillsSocial connections
Civic engagement and governance
Environmental quality
Personal security
Subjective well-being
0
2
4
6
8
10Slovenia OECD
Well-being outcomes: Better Life IndexFrom 0 (worse) to 10 (best), 2014¹
3
Slovenia grew rapidly until 2008, but the crisis hit hard
Source: OECD Economic outlook 96 database.
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
90
110
130
150
170
190
210
230
250
GDP in volume
Slovenia Czech Republic Euro periphery Poland
Hungary
Index, 1991 = 100
4
Recovery has been slow - bank credit to the private sector is still falling
Source: ECB Statistical Data Warehouse.
2010 2011 2012 2013 2014 2015-20
-15
-10
-5
0
5
10
15
Credit growth
Slovenia - Enterprises Slovenia - Households
EA - Enterprises EA - Households
Y-o-y % change
5
Unemployment is becoming entrenched and has increased among the young
1. Unemployed of one year or more as a percentage of total unemployment, 2007 and 2013. Countries are shown in ascending order of the incidence of long-term unemployment in 2013. Data are not seasonally adjusted but smoothed using three-quarter moving averages. OECD is the weighted average of 33 OECD countries excluding Chile.2. Data are seasonally adjusted and refer to the unemployment rate of individuals aged 15-24.Source: OECD calculations based on quarterly national labour force surveys, for Panel A; and OECD Short-Term Labour Market Statistics database, for Panel B.
KOR
NO
RC
ANSW
EFI
NAU
TD
NK
LUX
G7
NLD
POL
JPN
DEU BE
LES
PSV
NIT
ASV
K0
10
20
30
40
50
60
70
80
A. Long term unemployment, 2013¹%
2008 2009 2010 2011 2012 2013 20140
5
10
15
20
25
30
B. Youth unemployment rate²%
6
2006 2007 2008 2009 2010 2011 2012 2013 20140
10
20
30
40
50
60
70
80
90
100
Gross public debt, Maastricht criterion% of GDP
Public debt has risen steeply
Source: OECD Economic outlook 96 database.
7
Numerous rigidities hinder adjustment
Note: the numerical PMR indicators represent the stringency of regulatory policy in specific areas on a scale of 0 to 6 with a higher number indicating a policy stance that is deemed less conducive to competition. In each case, it characterises the stance of regulation as it stood in early 2013 and does not reflect the reforms implemented since then.Source: OECD PMR indicators database.
Net
herl.
..
Uni
ted
...
Aust
ria
Den
mar
k
New
Ze.
..
Italy
Aust
ralia
Esto
nia
Finl
and
Ger
man
y
Portu
gal
Hun
gary
Slov
ak ..
.
Belg
ium
Cze
ch R
...
Japa
n
Can
ada
Spai
n
Irela
nd
Luxe
mb.
..
Nor
way
Fran
ce
OEC
D
Icel
and
Switz
er...
Chi
le
Swed
en
Pola
nd
Slov
enia
Gre
ece
Kore
a
Mex
ico
Isra
el
0
0.5
1
1.5
2
2.5
Overall Product Market Regulation (PMR) indicator, 2013
8
Recent reform efforts will help growth
The impact of recent structural reforms on GDP over 10 years
GDPVia Employment
growthVia Productivity
growth
Impact on GDP growth over the horizon of 10 years (in %)
Product Market Reform 1.3 1.3
Labour Market Reform
Employment Protection Legislation 0.3 0.3
Pension reform 0.4 0.4
Total 2.0 0.4 1.6
1. OECD estimates for the impact of product market reform include changes to the product market regulation (PMR) as captured by the change in the OECD PMR indicator between 2008-2013, announced privatisations and reforms via EU commitments. The 2008-2013 change in the PMR is assumed to start having an effect on growth two years before other reforms.2. Impact on the labour market reform is assessed via the effect of the change in the employment protection legislation (EPL) on growth. Effect of the pension reform is based on a judgement and assesses the effect on employment via increased incentives for older people to stay in the labour market.Source: OECD calculations.
9
Main Findings
1. Slovenia grew rapidly before the crisis and today compares well on well‑being indicators.
2. The crisis exposed important weaknesses. The banking sector and the corporate sector need further restructuring.
3. Long‑term unemployment is high and unemployment among the young has increased steeply.
4. Rising public debt has to be put on a downward path, particularly in view of looming pressures from population ageing.
5. Business environment and regulation could be further improved to boost investment and attract capital.
10
Key Recommendations
1. Enhance the leading role of the Bank Asset Management Company to ensure swift restructuring of companies and liquidation of assets.
2. Increase resources for active labour market policies and better target assistance to the long-term unemployed and the low-skilled.
3. Focus fiscal consolidation on structural measures and strengthen the fiscal framework by a credible fiscal rule and fiscal council.
4. Pursue further pension reform and thoroughly reform the health sector to improve efficiency.
5. Continue with structural reform, including by privatising state owned enterprises and easing regulation on businesses.
12
Restructuring has strengthened banks
Source: IMF Financial Soundness Indicator database.
2011 2012 2013 20148
10
12
14
16
18
20
Regulatory Tier 1 Capital to Risk-Weighted Assets%
13
But more is needed
1. 2014 Q4 or latest data available.2. Average return on asset in the four quarters of 2014, except for France and Germany whose data refers to 2013.Source: IMF Financial Soundness Indicator database.
EST
LUX
DEU AU
T
BEL
FRA
LTV
SVK
ESP
PRT
SVN
ITA
IRL
GR
C0
5
10
15
20
25
30
35
40
A. Non-performing loans to total gross loans¹%
PRT
GR
C
AUT
ITA
IRL
BEL
SVN
ESP
FRA
NLD
DEU LU
X
LTV
SVK
EST
-0.5
0.0
0.5
1.0
1.5
B. Return on assets²%
14
Corporates are highly indebted
Source: OECD, Financial indicators database.
CH
E
USA
SWE
LUX
FRA
GBR AU
S
ISR
BEL
DN
K
CH
L
ESP
CAN ES
T
FIN
IRL
HU
N
POL
DEU CZE SV
K
NLD
AUT
TUR
GR
C
SVN
ITA
KOR
JPN
PRT
NO
R
0
20
40
60
80
100
120
140
160
180
Debt to equity ratio2013 or latest data available
15
Challenges in the banking and corporate sectors
1. Identify the most important firms to be restructured, and transfer all their assets to the Bank Asset Management Company.
2. Safeguard the independence and high standards of governance in the Bank Asset Management Company.
3. Monitor the implementation of the new insolvency regulation. Provide training for judges and insolvency administrators, and make out-of-court restructuring faster and more attractive.
4. Privatise state-owned banks as planned, without retaining blocking minority shareholdings.
17
Spending control is a challenge
1. Total general government expenditure corrected for exceptional net capital transfers and payments and other exceptional transfers.Source: OECD Economic outlook 96 database.
ISR
POL
CAN
DEU USA
CZE
HU
N
CH
E
AUT
GR
C
AUS
SWE
EST
NLD
PRT
ITA
NO
R
OEC
D
KOR
TUR
FRA
GBR ES
P
ISL
SVK
JPN
MEX NZL IR
L
BEL
SVN
DN
K
FIN
-2
0
2
4
6
8
10
12
14
Growth in public expenditure¹ net of one-offs, 2007-14 change% points of GDP
18
Ageing-related spending will rise
1. Based on "Cost-containment scenario", (Oliveira Martins and de la Maisonneuve, 2014). Where projections are not available over the period 2015-30, linear interpolation has been applied.Source: Secretariat calculations based on Economic Outlook no 96 projections.
HU
N
ITA
CH
E
PRT
USA
GR
C
EST
POL
SWE
GBR CZE JP
N
DN
K
ESP
FRA
IRL
ISR
AUS
ISL
CAN SV
K
DEU SV
N
NZL
KOR
AUT
NLD FI
N
BEL
LUX
0
1
2
3
4
5
6
Increased spending¹ on pensions and health care, change 2015-30 % of GDP
19
The tax mix hinders growth
1. Marginal tax wedge in % of total earnings, 2013: Individual earning 167% of average wage, single person with no children.2. 2013 or latest year available.Source: Public Sector, Taxation and Market Regulation database.
Chi
le
Kore
a
Japa
n
Pola
nd
Spai
n
Esto
nia
Uni
ted
Stat
es
Isra
el
OEC
D
Icel
and
Hun
gary
Net
herla
nds
Nor
way
Irela
nd
Finl
and
Slov
enia
Italy
Belg
ium
0
10
20
30
40
50
60
70
80
A. Taxes on labour are high for high earners¹
%
Esto
nia
Slov
ak R
epub
lic
Aust
ria
Chi
le
Net
herla
nds
Swed
en
Pola
nd
Hun
gary
Den
mar
k
OEC
D
Spai
n
Irela
nd
Icel
and
Isra
el
Japa
n
Luxe
mbo
urg
Belg
ium
Uni
ted
King
dom
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Property taxation revenues²
% of GDP
20
Fiscal reform
1. Focus fiscal consolidation on structural measures to increase cost efficiency in education, public administration and local government.
2. Adopt a fiscal rule with a credible and transparent expenditure rule and charge an independent and effective fiscal council with assessing adherence.
3. Reduce top tax rates on labour income. Increase recurrent taxes on real estate.
4. Increase the statutory and minimum pension ages and link them explicitly to life expectancy. Calculate pension rights over lifetime contributions.
22
Spending on active labour market programmes is low
1. 2012 or latest data available.Source: OECD Social Expenditure database.
MEX
CH
L
USA IS
R
JPN
CAN SV
K
CZE
SVN
NZL
EST
AUS
KOR
POL
ITA
PRT
NO
R
CH
E
OEC
D
LUX
DEU
HU
N
AUT
BEL
ESP
FRA
IRL
NLD FI
N
SWE
DN
K
GR
C
GBR
0.0
0.5
1.0
1.5
2.0
2.5
Public expenditure on active labour market programmes¹
% of GDP
23
People should work longer
Source: OECD Economic outlook 96 database.
TUR
SVN
HU
NG
RC
LUX
POL
BEL
ITA
AUT
FRA
SVK
ESP
EU PRT
CZE
MEX IR
LO
ECD
GBR FI
NAU
SN
LDU
SAC
AND
NK
KOR
CH
LES
TD
EU ISR
JPN
NO
RC
HE
SWE
NZL IS
L
0
10
20
30
40
50
60
70
80
90
Labour force participation rate, 2013 - population aged 55-64%
24
State-involvement and regulation are still high
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Components of Product Market Regulation (PMR) indicator
Slovenia Best Performers¹ Euro area
Note: the numerical PMR indicators represent the stringency of regulatory policy in specific areas on a scale of 0 to 6 with a higher number indicating a policy stance that is deemed less conducive to competition. In each case, it characterises the stance of regulation as it stood in early 2013 and does not reflect the reforms implemented since then.1. The simple average of the five countries with the lowest values of each indicator is shown.Source: OECD PMR indicators database.
25
FDI is low
1. Inward position at year end.Source: OECD FDI series of BOP and IIP aggregates database.
1997 98 99 2000 2001 02 03 04 05 06 07 08 09 10 11 12 130
20
40
60
80
100
120
Evolution of FDI¹
Czech Republic Estonia Hungary Poland Slovak Republic Slovenia
% of GDP
26
High R&D spending does not convert into much innovation
Gre
ece
Slov
ak R
epub
licPo
land
Turk
eyLu
xem
bour
gSp
ain
Italy
Portu
gal
Hun
gary
Can
ada
Uni
ted
King
dom
Nor
way
Esto
nia
Cze
ch R
epub
licEU
28
Net
herla
nds
EU 1
5Fr
ance
Belg
ium
OEC
DSl
oven
iaAu
stria
Ger
man
yD
enm
ark
Swed
enFi
nlan
dJa
pan
Kore
aIs
rael
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Gross domestic expenditure on R&D
% of GDP
Mex
ico
Slov
ak R
epub
licTu
rkey
Chi
leG
reec
ePo
land
Portu
gal
Cze
ch R
epub
licSl
oven
iaSp
ain
Esto
nia
Hun
gary
Aust
ralia
New
Zea
land
Italy
Nor
way
Icel
and
Luxe
mbo
urg
Irela
ndC
anad
aU
nite
d Ki
ngdo
mEU
28
Belg
ium
Aust
riaFr
ance
Uni
ted
Stat
esO
ECD
Den
mar
kIs
rael
Net
herla
nds
Kore
aG
erm
any
Finl
and
Swed
enSw
itzer
land
Japa
n
0
0.5
1
1.5
2
2.5
3
Triadic patent families% of GDP billion
USD PPPs
Source: OECD Main Science and Technology Indicators database.
27
Structural reform
1. Increase resources for active labour market policies and better target assistance to the long-term unemployed and the low-skilled.
2. Help older workers adapt to new tasks and technologies through life-long learning and targeted training programmes.
3. Continue privatising state-owned enterprises and strengthen their governance.
4. Introduce the ‘silence is consent’ rule for issuing licences to start a business and make obtaining construction permits and registering property faster. Reduce entry barriers in professional services.
5. Implement the government’s unified innovation policy. Strengthen collaborative links between major stakeholders of innovation policy.
28
More Information…
www.oecd.org/eco/surveys/economic-survey-slovenia.htm
OECD
OECD Economics
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