Slovenia: country overview

12 May 2012
by Ina Dimireva -- last modified 19 July 2012

Slovenia became the first 2004 European Union entrant to adopt the euro (on 1 January 2007) and has experienced one of the most stable political and economic transitions in Central and Southeastern Europe.

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Slovenia

Year of EU entry: 2004

Member of Schengen area: Yes

Political system: Republic

Capital city: Ljubljana

Total area: 20 273 km²

Population: 2 million

Currency: euro

Listen to the official EU language: Slovenian

Country overview

Previously one of Yugoslavia’s six constituent republics, present-day Slovenia became independent in 1991 as Yugoslavia fell apart. It is bordered by Italy, Austria, Hungary and Croatia.

Four major European geographic regions meet in Slovenia: the Alps, the Dinaric area, the Pannonian plain and the Mediterranean. The country is mountainous, and Slovenes are keen skiers and hikers. The national flag depicts the three-peakedTriglav, Slovenia’s highest mountain at 2 864 metres.

The country was once part of the Austro-Hungarian empire. The capital, Ljubljana, was founded in Roman times. Its university, with more than 50 000 students, contributes to the city’s busy cultural life. The main industries are car parts, chemicals, electronics, electrical appliances, metal goods, textiles and furniture.

Economy Overview

With the highest per capita GDP in Central Europe, Slovenia has excellent infrastructure, a well-educated work force, and a strategic location between the Balkans and Western Europe. Privatization has lagged since 2002, and the economy has one of highest levels of state control in the EU. Structural reforms to improve the business environment have allowed for somewhat greater foreign participation in Slovenia's economy and have helped to lower unemployment. In March 2004, Slovenia became the first transition country to graduate from borrower status to donor partner at the World Bank. In December 2007, Slovenia was invited to begin the accession process for joining the OECD. Despite its economic success, foreign direct investment (FDI) in Slovenia has lagged behind the region average, and taxes remain relatively high. Furthermore, the labor market is often seen as inflexible, and legacy industries are losing sales to more competitive firms in China, India, and elsewhere. In 2009, the world recession caused the economy to contract - through falling exports and industrial production - by 8%, and unemployment to rise. Although growth resumed in 2010, the unemployment rate continued to rise, approaching 11% in 2011.