Press release from the Governing Board of the Bank of Slovenia of 5 May 2009

1. At today's meeting the Governing Board of the Bank of Slovenia discussed economic and financial developments. Certain indicators in Europe and around the world show that the slowdown in economic activity is easing. Economic activity indicators in Slovenia convey a similar picture. Despite signs of improvement, forecasts of economic growth for this year remain profoundly negative. On 4 May the European Commission released updated forecasts of economic trends that indicate a sharp deterioration in activity in Slovenia's major trading partners. As a result the economic growth forecast for Slovenia has also been revised downwards. This could result in a significant deterioration in the public finance position if appropriate measures are not adopted to stabilise public finance equilibrium. Elements that could affect the probability of economic recovery in Slovenia primarily include a deterioration in the cost competitiveness of the Slovenian economy (dependent on the control of wage growth), the impact of negative factor income on the balance of payments, the ability of the banking sector to finance activity and the effectiveness of management of public finance trends, as a result of the global economic crisis. 

2. The Governing Board of the Bank of Slovenia was also briefed on the Report on Slovenia's International Economic Relations, February 2009, the Financial Accounts of Slovenia, May 2009, and current bank operations and developments on the capital markets for April 2009.