2021 Entrepreneurial Activity Review

In 2021, Slovenia experienced a gradual recovery from COVID-19, both in the general economy and for entrepreneurs specifically. Consumer conditions improved: the rate of Slovenians who said their household had lost income because of the pandemic declined to 34.2% in 2021, from 44.7% in 2020. Conversely, 12% of respondents stated their household income had increased because of the pandemic, the second highest among GEM Level B economies. These conditions likely contributed to a better economic environment for entrepreneurs to grow.

Slovenia’s TEA rate increased to 6.7%, up from 6.0% in 2020, while EBO increased to 8.5%, from 7.0%. This is credit to the country’s entrepreneurs, given the macro challenges faced throughout the world. Indeed, the rate of TEA respondents who said that starting a business was more difficult than the previous year was only 23%, the second lowest among GEM Level B economies. This suggests a strong entrepreneurial confidence among Slovenians. Other data collected by GEM’s Slovenian team support this claim. The rate of Slovenian respondents who said it was easy to start a business was 61% in 2021, second among GEM Level B economies.

Maintaining Slovenia’s steady entrepreneurial gains of 2021 will be the challenge for policymakers in 2022. There are reasons to be cautious, particularly regarding established businesses. For example, only 31.5% of EBO respondents state they see new opportunities as a result of the pandemic and only 30.9% plan to use more digital technologies to sell their products in the next six months. These suggest that established businesses may be reluctant to shift their resources and strategies to deal with new business realities presented by the pandemic, which is still ongoing in the region. Policies that incentivize the integration of new digital technologies, such as targeted tax breaks for new technical investments, could boost this activity, enabling established businesses to meet new consumer demands.

2021 Framework Conditions Review

Slovenia’s framework conditions generally improved in 2021, although scores were relatively low compared to peer Level B economies. The condition of Entrepreneurial Finance was given a 4.5 score, placing it seventh among GEM Level B economies, but Ease of Access to Entrepreneurial Finance was scored at 3.7, 16th among these economies. This disparity between the quality of finance and the ability to get it may reflect a situation where there is bias in how finance is distributed. Financial institutions may prefer doing business with established customers as opposed to new ones. The emergence of alternative vehicles for finance, such as lending platforms and other fintech solutions, may improve the situation.

Slovenia’s strongest performing conditions relate to its internal market. The condition Ease of Entry: Market Dynamics increased its score to 6.0 in 2021, placing it fourth among GEM Level B economies, and up from 5.6 in 2020. Its Ease of Entry: Burdens and Regulation score decreased slightly to 4.3 but was still fifth among Level B economies in 2021. These relatively strong scores reflect the overall positive economic and consumer environment in which entrepreneurs operated during 2021. There appears to be lower entry barriers to accessing new Slovenian customers, who are willing to try new products and services. This is somewhat contradicted by Slovenia’s lower score on Social and Cultural Norms, which declined to 3.2 in 2021, from 4.5 in 2020. This should be monitored moving forward, as it may be a leading indicator of some societal pushback on entrepreneurship, despite recent success.