2015 Index of Economic Freedom

Slovenia

overall score60.3
world rank88
Rule of Law

Property Rights60.0

Freedom From Corruption57.0

Limited Government

Government Spending0.0

Fiscal Freedom58.1

Regulatory Efficiency

Business Freedom81.2

Labor Freedom57.1

Monetary Freedom81.3

Open Markets

Trade Freedom88.0

Investment Freedom70.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 2.1 million
  • GDP (PPP):
    • $57.4 billion
    • -1.1% growth
    • -2.0% 5-year compound annual growth
    • $27,900 per capita
  • Unemployment:
    • 10.6%
  • Inflation (CPI):
    • 1.6%
  • FDI Inflow:
    • $-678.6 million
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Slovenia’s economic freedom score is 60.3, making its economy the 88th freest in the 2015 Index. Its score has decreased by 2.4 points since last year, reflecting a combined decline in the management of public spending, business freedom, and freedom from corruption that dwarfs improvements in labor freedom and monetary freedom. Slovenia is ranked 36th out of 43 countries in the Europe region, and its overall score is just below the world average.

Over the past five years, economic freedom in Slovenia has fallen by 4.3 points, the biggest decline in Europe other than in Greece and Cyprus. A decline of more than 40 points in the control of government spending has led to a deterioration of fiscal soundness that has pushed Slovenia close to losing its status as a “moderately free” economy.

Slovenia’s rising government spending and failure to privatize industries after its transition from Communism underline its structural problems. The labor market remains rigid despite reform efforts, and the lack of overall regulatory efficiency limits private-sector growth. While property rights are respected, the level of perceived corruption has increased.

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Background

The government of Slovenian Democratic Party Prime Minister Janez Janša collapsed in February 2013. Janša was subsequently convicted of corruption and began serving a two-year prison sentence in June 2014. In July 2014, Miro Cerar’s new SMC party won a plurality of seats in parliament with about 35 percent of the popular vote. Privatizations and efforts to reduce the public sector have been slowed by instability. The government still controls about half of the economy. A government bailout of over €3 billion went to banks carrying bad loans in December 2013. Slovenia joined the European Union and NATO in 2004, adopted the euro in 2007, and joined the Organisation for Economic Co-operation and Development in 2010. The country has excellent infrastructure and an educated workforce.

Rule of LawView Methodology

Property Rights 60.0 Create a Graph using this measurement

Freedom From Corruption 57.0 Create a Graph using this measurement

Corruption, while less extensive than in some other Central European countries, remains a problem, usually involving conflicts of interest and contracting links between government officials and private businesses. The judicial system is sound and transparent but remains comparatively inefficient, understaffed, and plagued by a large case backlog. Private property rights are constitutionally guaranteed, but enforcement is slow.

Limited GovernmentView Methodology

Slovenia’s top individual income tax rate is 50 percent, and its corporate tax rate has increased to 17 percent. Other taxes include a value-added tax and a property transfer tax. The overall tax burden equals 37.4 percent of the domestic economy. Public expenditures amount to 59.4 percent of domestic income, and government debt is equal to 73 percent of GDP.

Regulatory EfficiencyView Methodology

The overall regulatory framework has undergone a series of reforms aimed at facilitating entrepreneurial activity, but the pace of reform has slowed. A labor market reform in 2013 has reduced the costs of hiring and layoffs. The IMF urged the government to cut numerous subsidies and transfers, but renewable energy subsidies were increased by over 30 percent.

Open MarketsView Methodology

EU members have a 1.0 percent average tariff rate. Although some non-tariff barriers exist, the EU is relatively open to external trade. Slovenia generally treats foreign and domestic investors equally. With economic stagnation continuing, nonperforming loans have increased and undermine overall banking soundness. The state continues to retain ownership in the banking sector.

Country's Score Over Time

Bar Graph of Slovenia Economic Freedom Scores Over a Time Period

Country Comparisons

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Regional Ranking

rank country overall change
1Switzerland80.5-1.1
2Estonia76.80.9
3Ireland76.60.4
4Denmark76.30.2
5United Kingdom75.80.9
6Lithuania74.71.7
7Germany73.80.4
8The Netherlands73.7-0.5
9Finland73.40.0
10Luxembourg73.2-1.0
11Georgia730.4
12Sweden72.7-0.4
13Czech Republic72.50.3
14Iceland72-0.4
15Norway71.80.9
16Austria71.2-1.2
17Latvia69.71.0
18Belgium68.8-1.1
19Poland68.61.6
20Cyprus67.90.3
21Spain67.60.4
22Slovakia67.20.8
23Armenia67.1-1.8
24Macedonia67.1-1.5
25Hungary 66.8-0.2
26Bulgaria66.81.1
27Romania66.61.1
28Malta66.50.1
29Albania65.7-1.2
30Portugal65.31.8
31Montenegro64.71.1
32Turkey63.2-1.7
33France62.5-1.0
34Italy61.70.8
35Croatia61.51.1
36Slovenia60.3-2.4
37Serbia 600.6
38Bosnia and Herzegovina590.6
39Moldova57.50.2
40Greece54-1.7
41Russia52.10.2
42Belarus49.8-0.3
43Ukraine46.9-2.4
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