2013 Index of Economic Freedom

Slovenia

overall score61.7
world rank76
Rule of Law

Property Rights60.0

Freedom From Corruption59.0

Limited Government

Government Spending22.3

Fiscal Freedom65.7

Regulatory Efficiency

Business Freedom80.7

Labor Freedom40.4

Monetary Freedom81.6

Open Markets

Trade Freedom86.8

Investment Freedom70.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 2.0 million
  • GDP (PPP):
    • $57.9 billion
    • -0.2% growth
    • 0.6% 5-year compound annual growth
    • $28,642 per capita
  • Unemployment:
    • 8.4%
  • Inflation (CPI):
    • 1.8%
  • FDI Inflow:
    • $999.2 million
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Slovenia’s economic freedom score is 61.7, making its economy the 76th freest in the 2013 Index. Its score has decreased by 1.2 points since last year, with declines in half of the 10 economic freedoms, including substantial drops in scores for government spending and freedom from corruption. Slovenia is ranked 34th out of 43 countries in the Europe region, and its overall score is still above the world average.

Slovenia has been on a downward trend in economic freedom since 2010, with scores declining over one point for two years in a row. Structural reform has been uneven, and institutional weaknesses continue to undermine prospects for long-term economic development. The judicial system remains inefficient and vulnerable to political interference, and corruption is perceived as widespread.

Despite the challenging European economic environment, Slovenia appears to be accelerating the pace of structural reform. The proposed changes in the pension system are intended to ease the strain on the budget caused by a rapidly aging population. One of the main elements involves raising the retirement age to 65 in stages over the next seven years. The government has also proposed employment reforms to increase labor market flexibility by reducing non-wage costs.

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Background

Janez Janša, elected prime minister by the National Assembly in February 2012, heads a center-right coalition government. Slovenia largely managed to avoid the bloody conflict that followed Croatia’s secession from the former Yugoslavia. Its economic infrastructure remained intact, and its economy experienced solid growth until the 2008 global recession. Slovenia is a member of the International Monetary Fund, World Bank Group, European Bank for Reconstruction and Development, and 40 other international organizations. It joined the European Union and NATO in 2004, adopted the euro as its currency in 2007, and became a member of the Organisation for Economic Co-operation and Development in 2010. Slovenia fell into its second recession in three years during the last quarter of 2011, but the economy has rebounded.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 59.0 Create a Graph using this measurement

Private property rights are constitutionally guaranteed, but the courts are inadequately staffed and slow. The judicial framework, despite gradual progress, remains vulnerable to political interference. Enforcement of legal measures to safeguard intellectual property rights is ineffective. The small size of Slovenia’s political and economic elite contributes to a lack of transparency in government procurement and widespread cronyism in the business sector.

Limited GovernmentView Methodology

The top income tax rate is 41 percent, but the corporate tax rate has fallen to 18 percent. Other taxes include a value-added tax (VAT) and a property transfer tax. The overall tax burden equals 37.9 percent of total domestic income. Government spending has risen to 50.9 percent of GDP. The budget deficit remains over 5 percent of GDP, and public debt is now over 45 percent of GDP. Concerns about Slovenia’s debt load are rising.

Regulatory EfficiencyView Methodology

Despite progress in streamlining the process for launching a business, other time-consuming requirements reduce the regulatory system’s efficiency. With no minimum capital required, launching a business takes only six days, but it still takes almost 200 days to complete all of the necessary licensing requirements. Rigid labor regulations continue to hamper dynamic employment growth. Inflation has been low.

Open MarketsView Methodology

The trade-weighted average tariff rate is a low 1.6 percent as in other members of the European Union, with some non-tariff barriers further increasing the cost of trade. Most sectors of the economy are open to foreign investment, but the overall investment regime lacks efficiency. Despite some progress, privatization of state-owned financial institutions has been uneven, and the banking sector has been under strain.

Country's Score Over Time

Bar Graph of Slovenia Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Slovenia to other economic country groups

Regional Ranking

rank country overall change
1Switzerland81-0.1
2Denmark76.1-0.1
3Ireland75.7-1.2
4Estonia75.32.1
5United Kingdom74.80.7
6Luxembourg74.2-0.3
7Finland741.7
8The Netherlands73.50.2
9Sweden72.91.2
10Germany72.81.8
11Georgia72.22.8
12Lithuania72.10.6
13Iceland72.11.2
14Austria71.81.5
15Czech Republic70.91.0
16Norway70.51.7
17Armenia69.40.6
18Belgium69.20.2
19Cyprus69-2.8
20Slovakia68.71.7
21Macedonia68.2-0.3
22Spain68-1.1
23Malta67.50.5
24Hungary 67.30.2
25Latvia66.51.3
26Poland661.8
27Albania65.20.1
28Romania65.10.7
29Bulgaria650.3
30France64.10.9
31Portugal63.10.1
32Turkey62.90.4
33Montenegro62.60.1
34Slovenia61.7-1.2
35Croatia61.30.4
36Italy60.61.8
37Serbia 58.60.6
38Bosnia and Herzegovina57.30.0
39Moldova55.51.1
40Greece55.40.0
41Russia51.10.6
42Belarus48-1.0
43Ukraine46.30.2
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