Slovenia's strong post-pandemic recovery has been hit by strong headwinds from the war in Ukraine, higher energy prices, and supply chain bottlenecks. At the same time, the strong labour market performance has led to historically high employment, low unemployment and widespread labour shortages. Thus, inflation will remain high as growth slows. Looking further out, population ageing will lead to a smaller and older workforce, while the number of pensioners increases. Financing the fiscal costs of population ageing requires containing ageing-related spending increases in the pension, health and long-term care systems. Furthermore, sustaining growth and income convergence will increasingly rely on improving labour allocation, while supporting productivity growth through higher investments in new technologies, such as digitalisation. The successful digitalisation of the economy will have positive impacts on productivity growth and inclusiveness. An important element in any digitalisation strategy is to secure affordable and widespread connectivity. Moreover, the public sector's digitalisation efforts will encourage households and firms to adopt such new technologies. This, however, depends on the education and training system's ability to provide students at all levels and workers with better digital skills.

SPECIAL FEATURE: ECONOMIC OUTLOOK; POPULATION AGEING; DIGITALISATION OF THE ECONOMY