FISCAL ADJUSTMENTS IN THE EU AND SLOVENIA DURING COVID PANDEMIC AND ITS IMPACT
FISCAL ADJUSTMENTS IN THE EU AND SLOVENIA DURING COVID PANDEMIC AND ITS IMPACT

Summary/Abstract: The Covid pandemic have led to a sharp drop in private demand across Europe and in Slovenia, which has severely crippled economies. In order to minimize the health and economic impact of the crisis, countries have taken a number of necessary measures to help households and the economy through fiscal policy. In economic situations, such as a pandemic recession, fiscal policy should be counter-cyclical, but as much as possible aimed at helping those who are directly affected, rather than at boosting aggregate demand in general. It can be noted that the fiscal effort at the start of the 2020 pandemic was strongly negative in the European Union and Slovenia, as was gross domestic product, the highest over the observation period. The estimates of potential GDP in 2019 were higher compared to later estimates. Slovenia's estimated potential output for the period 2020-2024 has almost returned to the estimated level of 2019 after the initial Covid-19 shock. The growth contributions of potential output are structured quite differently over the observation period.

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