Slovenia - just another NGDP crisis

Slovenia - just another NGDP crisis
Since the collapse of Cyprus' economic and financial system earlier this year everybody have been looking for the next euro zone country to get in trouble. In fast became clear that the next country in line could very well be Slovenia and the country's Prime Minister Alenka Bratušek has been fighting to save her country from disaster in the last couple of months. However, Mrs. Bratušek is not only facing an economic and financial crisis. She is also facing a political crisis. This is from The Slovenia Times:
The executive committee of Positive Slovenia (PS) postponed on Thursday the election congress scheduled for 19 October to a period before the next general election. The committee also unanimously expressed its full support for Alenka Bratušek as PM and party president. The next regular election is scheduled for 2015.
The move seems to resolve an imminent crisis in the party and possibly the ruling coalition, which was heralded by Wednesday's decision of the PS's former head and founder Zoran Janković to challenge Bratušek at the election congress. "This is the strongest political message...that can come from the party at this moment," PS vice-president Robert Golob told the press, arguing the party had united in the view to put the interests of the country before its own considerations. Golob added that Bratušek, who did not give statements after the meeting, probably "has even more support today than she had yesterday or a month ago". Bratušek said in a press release in the morning that nobody should live under the illusion they can use the election congress as a tool for controlling the prime minister.
So Slovenia's ruling coalition is falling apart and there is still no clear message on whether Slovenia will will get a bail-out package from the EU to prop up it's ailing government owned banks. Meanwhile, the economy continues to contract. And even though things clearly have become less gloomy for the euro zone in recent months it to say much positive about the developments in Slovenia - the country has been in recession for nearly two years, public finances continue to deteriorate despite austerity measures put in place and non-performing loans in the banking sector keeps rising. So what is the problem? Well, Slovenia has some well-known problems. The economy is massively over-regulated and uncompetitive, the banking sector is government owned and has always have problems with large amounts non-performing loans and the political system is dysfunctional (as in many other Central and Eastern European countries). However, this problems are well-known and the story was the same five or ten years ago, but the real problem, but is new is the collapse in nominal GDP that we have seen since 2008-9. Hence, in the decade leading up to the crisis NGDP growth averaged around 10%, but since 2008 NGDP has more or less consistently been negative. Now country or banking sector can stay solvent when such a shift in NGDP growth or


WORLD LEADING ADVISORY SPECIALISING IN THIS TOPIC

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