The End of Transition in Slovenia: Were the Deviations Successful?

Abstract

Slovenia’s economic transformation deviated from the usual patterns: its general approach to reforms was rather conservative and had more elements of gradualism than shock therapy. It was inclined to tolerate inflation as Slovenia decided to pursue some priorities other than fighting inflation at any price. The decisive period was between 1991 and 1994 when the government implemented crucial reforms creating favorable conditions for inflation to decrease and, at the same time, turn the economy toward sustained growth. Indeed, GDP growth rates after 1993 were between 3% and 5% while inflation remained on a moderate level. Immediately before entering the EU and ERM2 inflation was finally reduced.