What will EU membership mean for Slovenia's economy?
Only a few weeks ahead of Slovenia's EU accession, debates on the consequences for Slovenia's economy have started again. What will change and what are the expectations of Slovenia's experts in this field?
"What can we expect from joining the EU in macroeconomic terms, of course we all know that joining larger markets means an impetus for growth of exports. It should mean, of course, higher inflow of foreign direct investment (FDI). As you know we have had quite a low rate of FDI inflows and we expect actually that the entry into the EU will create a more stable, more predictable and also less complicated environment for foreign investment. We think that the rate of inflows of FDI around 2 to 3 % of GDP would be quite normal to expect in the first years of membership. Although this is not what happened last year, for example."
While an increase in foreign direct investment is important for the economy, most Slovenes are more concerned about the price of goods after May 1st. Many are concerned that prices will rise but the experts say some prices will in fact decrease.
A very visible change in Slovenia's economy since the EU accession process began is the number of foreign banks opening branches here. In fact many Western European banks are finding their biggest growth markets are those of the new member states of Central Europe. But in Slovenia local banks still hold a significant share of the market. Dr France Arhar is a former governor of the Bank of Slovenia and current director of Creditanstalt Slovenia.
"Not only in Slovenia, but in all those countries, we need additional financial support, by both types of investment, direct investment as well as on the base of new credit arrangements. I wish to stress that, if you compare the current situation in Slovenia regarding who is who in the area of financial intermediation, we can state that foreign partners have, for the time being, over 30 % of ownership and that means the majority part is still in domestic hands. That is a huge difference compared with the other countries in transition, because in those countries as we know 70 % of ownership is in foreign hands and a very important part of this ownership is in Austrian hands."
Experts stress the need for additional foreign investments in Slovenia - but at the same time urge Slovenian investment in the former republics of Yugoslavia, such as Bosnia and Herzegovina. Economists say this should be a priority of economic development and a way of regaining a profitable share in the markets of the once common state.