Economic growth overshoots market estimates in Q4

GDP growth inches up in Q4: Slovenia's GDP grew 2.0% on a year-on-year basis in Q4, following a 1.9% expansion in the previous quarter. Q4's reading was the strongest since Q1 2024 and came in above market estimates. On a seasonally adjusted quarter-on-quarter basis, economic output expanded 0.4% in Q4, following a 0.9% expansion in the prior quarter. That said, GDP growth rose 1.1% in 2025 as a whole, down from the 1.7% growth posted in 2024, and clocking the weakest result in the post-pandemic era.

A broad-based improvement drives Q4’s uptick: Relative to the previous quarter's data, figures in Q4 improved for private consumption (+3.0% in annual terms vs +1.3% in Q3), government consumption (+3.8% vs +1.2% in Q3) and fixed investment (+11.9% vs +10.0% in Q3). Meanwhile, growth in imports of goods and services strengthened (+4.8% vs +1.7% in Q3), more than offsetting the positive impact on GDP growth of an acceleration in growth in exports of goods and services (+0.5% vs -0.4% in Q3). The stronger growth rate in fixed investment was linked to increased spending on buildings and other structures, which was likely bolstered by EU fund inflows and past ECB monetary policy easing. On the external front, strong private consumption likely drove a sharp rise in imports, in turn weighing on net trade.

Stronger private consumption to drive GDP growth in 2026: Our Consensus is for GDP growth to accelerate from Q4 2025 in Q1 2026 as past interest rate cuts boost fixed investment, and as softer inflation supports private spending growth. In 2026, economic growth should hit a three-year high, driven by accelerating public spending and stronger momentum in private consumption, which will benefit from a tighter labor market. On the external front, exports are expected to gain traction as the economies of Germany and the euro area strengthen. Weaker-than-expected economic growth in Germany is a downside risk.

Panelist insight: Commenting on the outlook, Alen Kovac, analyst at Erste Bank, stated: “Going into 2026, domestic demand is expected to remain the key growth engine, with private consumption maintaining steady growth momentum on the back of resilient labor market conditions and steady confidence indicators. The investment profile is expected to maintain the improved footprint, supported by the absorption of EU funds. On the other hand, challenges regarding external demand developments should continue to weigh on the export outlook, thus diminishing the net export contribution in the period ahead.”

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