2021 Index of Economic Freedom

Slovenia

OVERALL SCORE68.3
WORLD RANK48
Rule of Law

Property Rights77.3

Judicial Effectiveness56.3

Government Integrity68.2

Government Size

Tax Burden58.2

Government Spending42.5

Fiscal Health91.1

Regulatory Efficiency

Business Freedom78.8

Labor Freedom61.5

Monetary Freedom81.9

Open Markets

Trade Freedom84.0

Investment Freedom70.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 2.1 million
  • GDP (PPP):
    • $79.2 billion
    • 2.4% growth
    • 3.3% 5-year compound annual growth
    • $40,657 per capita
  • Unemployment:
    • 4.2%
  • Inflation (CPI):
    • 1.6%
  • FDI Inflow:
    • $909.8 million

Slovenia’s economic freedom score is 68.3, making its economy the 48th freest in the 2021 Index. Its overall score has increased by 0.5 point, primarily because of an improvement in judicial effectiveness. Slovenia is ranked 28th among 45 countries in the Europe region, and its overall score is below the regional average but above the world average.

The Slovenian economy remains in the moderately free category for the fourth year in a row. To move higher in the economic freedom ranks, the government will need to take actions to improve such Index indicators as financial freedom and judicial effectiveness. There is a particular need to address high taxation and heavy spending policies that dampen private-sector investment and entrepreneurship.

IMPACT OF COVID-19: As of December 1, 2020, 1,490 deaths had been attributed to the pandemic in Slovenia, and the economy was forecast to contract by 6.7 percent for the year.

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Background

Slovenia joined the European Union and NATO in 2004 and adopted the euro in 2007. Janez Jansa of the center-right and euroskeptic Slovenian Democratic Party returned to power as prime minister for the third time in March 2020. He leads a center-right coalition with the center-left Party of Modern Centre, the conservative New Slovenia party, and the Democratic Party of Pensioners of Slovenia. Economic recovery and improvements in health care are key agenda items. Former Prime Minister Marjan Šarec of the center-left List party had resigned in January 2020, citing the inability of his center-left coalition to pass legislation. With its excellent infrastructure, well-educated workforce, and strategic location between the Balkans and Western Europe, Slovenia has one of Central Europe’s higher per capita GDPs.

Rule of LawView Methodology

Property Rights 77.3 Create a Graph using this measurement

Judicial Effectiveness 56.3 Create a Graph using this measurement

Government Integrity 68.2 Create a Graph using this measurement

Property rights are protected, but enforcement is slow. Property registration procedures have been improved. Virtually all land has a clear title. The judicial system is well developed and independent, but courts are inefficient. Corruption is an ongoing problem, although less so than in many of Slovenia’s neighbors. Forms of corruption include collusion among private firms and public officials using their power to influence state-owned enterprises.

Government SizeView Methodology

The top individual income tax rate is 50 percent, and the top corporate tax rate is 19 percent. Other taxes include value-added and property transfer taxes. The overall tax burden equals 36.4 percent of total domestic income. Government spending has amounted to 43.8 percent of total output (GDP) over the past three years, and budget surpluses have averaged 0.4 percent of GDP. Public debt is equivalent to 66.8 percent of GDP.

Regulatory EfficiencyView Methodology

The paid-in minimum capital requirement for starting a business has been reduced, and construction permits and electricity connections now cost less. The recovery rate when resolving insolvency has also improved. There is a high-quality labor force, but the labor market is rigid, and labor costs are high. The government’s 2020 budget included subsidies equal to 3.2 percent of GDP.

Open MarketsView Methodology

As a member of the EU, Slovenia has 45 preferential trade agreements in force. The trade-weighted average tariff rate (common among EU members) is 3 percent, with 639 EU-mandated nontariff measures in force. Slovenia has an additional 39 country-specific nontariff barriers. Full foreign ownership is permitted in most sectors. The financial sector has undergone liberalization, and the banking sector remains relatively sound.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Switzerland81.9-0.1
2Ireland81.40.5
3United Kingdom78.4-0.9
4Estonia78.20.5
5Denmark77.8-0.5
6Iceland77.40.3
7Georgia77.20.1
8Lithuania76.90.2
9Netherlands76.8-0.2
10Finland76.10.4
11Luxembourg760.2
12Sweden74.7-0.2
13Austria73.90.6
14Czech Republic73.8-1.0
15Norway73.40.0
16Germany72.5-1.0
17Latvia72.30.4
18Armenia71.91.3
19Cyprus71.41.3
20Bulgaria70.40.2
21Malta70.20.7
22Belgium70.11.2
23Azerbaijan70.10.8
24Spain69.93.0
25Poland69.70.6
26Romania69.5-0.2
27North Macedonia68.6-0.9
28Slovenia68.30.5
29Portugal67.50.5
30Serbia 67.21.2
31Hungary67.20.8
32Kosovo66.5-0.9
33Slovak Republic66.3-0.5
34France65.7-0.3
35Albania65.2-1.7
36Italy64.91.1
37Turkey64-0.4
38Croatia63.61.4
39Montenegro63.41.9
40Bosnia and Herzegovina62.90.3
41Moldova62.50.5
42Russia61.50.5
43Belarus61-0.7
44Greece60.91.0
45Ukraine56.21.3
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