LJUBLJANA, Sept 29: The newest euro zone member Slovenia on Saturday raised its 2007 inflation forecast to 4.3 per cent year-on-year from 3.2 per cent forecast in July, Finance Minister Andrej Bajuk said.

The government also raised its forecast for 2007 gross domestic product (GDP) growth to 5.8 per cent from 4.7 per cent forecast in April, mainly due to good international economic conditions and increased investment in Slovenia.

The new forecasts come a day after the Slovenian statistics office reported that September inflation rose to 3.6 per cent year-on-year from 3.4 per cent in August due to higher prices of clothes, shoes, food and restaurant services.

According to the government’s Institute of Macroeconomic Analysis and Development, 2007 inflation will be higher than earlier expected mainly on account of higher global food and oil prices.

Bajuk also said the 2008 budget deficit would be steady at 0.6 per cent of GDP but below the 0.9 per cent forecast earlier.

The budget deficit is expected to shrink further to 0.3 per cent of GDP in 2009.

“The deficit will be lower than earlier planned because we expect higher budget income and we have a sober policy of public spending,” Bajuk told a news conference.—Reuters