This paper reviews economic developments in Slovenia during 1990-96. Slovenia experienced its first positive real GDP growth in 1993. Real GDP grew by 1.3 percent. This modest recovery began under the impetus of buoyant domestic demand, which grew by 81/4 percent; real foreign demand contracted by 61/2 percent owing to a recession in Western markets. Despite the growth in real aggregate demand by more than 2 percent, the output response was dampened as domestic demand growth spilled primarily into a boom in consumer goods imports.