STA, 21 March 2019 - IMAD, the government's macroeconomic forecaster, has downgraded Slovenia's economic growth forecast for this year by 0.3 points in real terms to a still robust 3.4%, citing weaker export demand. Growth is projected to slow further next year, to 3.1%, IMAD said on Thursday.
The forecast marks a significant slowdown from the 4.5% growth rate that Slovenia recorded last year according to preliminary estimates, but it remains strong and is still well above the projections for the eurozone as a whole, which is expected to grow by well under 2% this year.
The revised budget for 2019 that the National Assembly passed in a re-vote yesterday assumes growth will stand at 3.7% this year.
IMAD forecasts that export growth will slow by over two points compared to last year to 5.1%, before ticking up slightly to 5.3% in 2020. As a result, the net contribution of foreign trade will be close to zero.
Private as well as government spending are expected to offset the weak exports, the forecast suggests.
Household spending growth is projected to remain strong and above last year's level (2.9% this year and 2.4% in 2020), with government spending expected to grow at a slightly slower pace of 2.2% and 1.9% respectively.
Investment spending will weaken substantially, on the other hand, with growth projected to slow to 7.7% this year and 7% in 2020 compared to low double-digit rates recorded in the last two years.
Job creation will continue, albeit at a slower pace: having hovered around 3% in the previous years, employment growth is projected to slow to 2% this year and 1% in 2020.
IMAD says job gains will be affected by the continued decline of the working-age population as the population as a whole ages.
Inflation will remain moderate and below 2%, the forecast suggests.
IMAD lists several risks that could affect its projections, among them a disorderly Brexit, US protectionism, and slowing growth in China.
The Chamber of Commerce and Industry (GZS) also revised its economic outlook for the economy downwards today. It now projects a 2.9% growth for this year, a deterioration of 0.6 percentage points on its previous forecast. The growth is to slow down to 2.2% next year.
The GZS attributed the downgrade to a slowdown in export markets. "Private consumption growth remains high, as does investment growth," it said.
The growth of merchandise exports is expected to decelerate to 4% in 2019 and to just 2% in 2020. "The projection is guided by rather weak confidence in manufacturing and a major restraint when it comes to new orders."
Household consumption is expected to grow at 2.4% this year. "We expect consumption of non-durable goods (cars, household appliances, home equipment) to slow down somewhat and the savings rate to slightly increase."
Nevertheless, the chamber upgraded the domestic spending forecast for 2020 to 2.1% due to cuts in tax on pay announced by the government.
The GZS's outlook is based on the presumption that the risks of trade wars, China's hard landing or a no-deal Brexit would not materialise.
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