Slovenia’s economy contracted at an annual rate of 4.8% in the first quarter of 2013. The country’s GDP has now fallen for four straight quarters on a year-over-year basis, and the situation is only continuing to worsen.
Slovenia has recently become Europe’s new problem child. Despite its small size–in 2012 its statistical office recorded a GDP of just €24 billion ($31 billion)–euro watchers are concerned that the country could require a Europe-sponsored bailout. About 20% of the loans made by its banking sector are non-performing. An even higher percentage of loans are in danger of default at the state-owned banks.
Euro-zone leaders are keeping a close eye on the country, waiting to see if it can complete a €1.2 billion bank recapitalization plan and privatize state assets to raise money.
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