2018 Index of Economic Freedom

Slovenia

overall score64.8
world rank64
Rule of Law

Property Rights76.6

Government Integrity52.1

Judicial Effectiveness57.7

Government Size

Government Spending31.2

Tax Burden58.7

Fiscal Health66.3

Regulatory Efficiency

Business Freedom79.5

Labor Freedom61.3

Monetary Freedom87.3

Open Markets

Trade Freedom86.9

Investment Freedom70.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 2.1 million
  • GDP (PPP):
    • $66.2 billion
    • 2.9% growth
    • 0.8% 5-year compound annual growth
    • $32,085 per capita
  • Unemployment:
    • 8.7%
  • Inflation (CPI):
    • -0.1%
  • FDI Inflow:
    • $919.2 million
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Slovenia’s economic freedom score is 64.8, making its economy the 64th freest in the 2018 Index. Its overall score has increased by 5.6 points, with a dramatic upsurge in fiscal health eclipsing lower scores for the government integrity and business freedom indicators. Slovenia is ranked 31st among 44 countries in the Europe region, and its overall score is below the regional average but above the world average.

The government of Slovenia has maintained a laser-like focus on fiscal consolidation to ensure the long-term stability of public finances. It is also implementing structural reforms in the corporate and banking sectors, restructuring and pursuing privatization of indebted state-owned enterprises, and improving corporate governance in the hope of attracting new foreign direct investment. Institutional weaknesses continue to undermine prospects for long-term economic development. In particular, the judicial system remains inefficient and vulnerable to political interference. Corruption continues to be perceived as widespread.

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Background

Slovenia joined the European Union and NATO in 2004 and adopted the euro in 2007. Prime Minister Miro Cerar’s Modern Centre Party won a plurality of parliamentary seats in 2014, and Cerar formed a coalition government with two other center-left parties. With 500,000 migrants traversing its territory en route to other EU nations, Slovenia implemented tougher border restrictions in 2016. Slovenia has excellent infrastructure, a well-educated work force, a strategic location between the Balkans and Western Europe, and one of Central Europe’s highest per capita GDPs. Heavily affected by Europe’s financial crisis, Slovenia opted for a $3.5 billion package of bailouts for largely state-owned banks in lieu of international aid. The economy continues to grow, powered by exports.

Rule of LawView Methodology

Property Rights 76.6 Create a Graph using this measurement

Government Integrity 52.1 Create a Graph using this measurement

Judicial Effectiveness 57.7 Create a Graph using this measurement

Enforcement of private property rights protections is slow, but property registration procedures have improved. Virtually all land has a clear title. The judicial system is sound and transparent but comparatively inefficient and inadequately resourced. Corruption is less prevalent in Slovenia than in many of its neighbors, but in a 2016 poll of Slovenian company managers, 74 percent said that they had encountered demands for bribes.

Government SizeView Methodology

The top individual income tax rate is 50 percent, and the top corporate tax rate is 17 percent. Other taxes include value-added and property transfer taxes. The overall tax burden equals 36.6 percent of total domestic income. Over the past three years, government spending has amounted to 47.9 percent of total output (GDP), and budget deficits have averaged 3.6 percent of GDP. Public debt is equivalent to 78.9 percent of GDP.

Regulatory EfficiencyView Methodology

A lack of government transparency and what at times has been inconsistent implementation of regulations hampers the entrepreneurial environment. Slovenia has a well-educated and skilled labor force, but rigid labor regulations cause the labor market to lack dynamism. The government is privatizing several state-run companies, such as Telekom Slovenije and Cinkarna Celje, but the reform process has been slow and complicated.

Open MarketsView Methodology

Trade is extremely important to Slovenia’s economy; the combined value of exports and imports equals 148 percent of GDP. The average applied tariff rate is 1.6 percent. Nontariff barriers impede some trade. Government openness to foreign investment is above average, but the overall investment regime lacks efficiency. Despite some progress, privatization of state-owned financial institutions has been uneven, and banking has been under strain.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Switzerland81.70.2
2Ireland80.43.7
3Estonia78.8-0.3
4United Kingdom781.6
5Iceland772.6
6Denmark76.61.5
7Luxembourg76.40.5
8Sweden76.31.4
9Georgia76.20.2
10Netherlands76.20.4
11Lithuania75.3-0.5
12Norway74.30.3
13Czech Republic74.20.9
14Germany74.20.4
15Finland74.10.1
16Latvia73.6-1.2
17Austria71.8-0.5
18Macedonia71.30.6
19Romania69.4-0.3
20Armenia68.7-1.6
21Poland68.50.2
22Malta68.50.8
23Bulgaria68.30.4
24Cyprus67.8-0.1
25Belgium67.5-0.3
26Hungary 66.70.9
27Kosovo66.6-1.3
28Turkey65.40.2
29Slovakia65.3-0.4
30Spain65.11.5
31Slovenia64.85.6
32Albania64.50.1
33Montenegro64.32.3
34France63.90.6
35Portugal63.40.8
36Italy62.50.0
37Serbia 62.53.6
38Bosnia and Herzegovina61.41.2
39Croatia611.6
40Moldova58.40.4
41Russia58.21.1
42Belarus58.1-0.5
43Greece57.32.3
44Ukraine51.93.8
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