Ljubljana related
STA, 16 August 2022 - Slovenia's economy grew at an annual rate of 8.2% in the second quarter of the year driven by domestic and foreign demand, according to preliminary figures released by the Statistics Office on Tuesday. The rate is a slowdown from the nominal annual rate of 9.6% in the quarter before as the latest data shows.
Household expenditure was the biggest driver of domestic consumption, as trade in services had the most positive effect on foreign demand.
Domestic consumption increased by 8% with household expenditure going up by 10.6%. Gross fixed capital formation rose by 6.4%. Changes in inventories contributed 1.1 percentage points to GDP growth.
Exports growth outpaced growth in imports as a result of a high increase in exports of services. Total exports went up by 8.7% and imports by 8.5% over the second quarter of 2021.
Exports of services increased by 38.7% as imports of services rose by 22.4%. By contrast, merchandise exports rose at a slower pace than imports of goods like in the previous four quarters.
External trade balance contributed 0.6 percentage points to GDP growth.
Total value added increased by 8.7% compared with the second quarter of 2021. Trade activity grew by 20.8% to have the most positive impact for the third consecutive quarter.
Services continued to grow strong, with the information and communication industry expanding by 13.7% and professional, scientific and technical activities expanding by 12.4%.
Meanwhile, growth in manufacturing had been slowing for the fifth consecutive quarter, but it remained positive, at 2.7% year-on-year in the second quarter.
Total employment in the second quarter increased by 3.4% year-on-year to 1,080,000 persons. Most new jobs were created in construction, manufacturing and professional, scientific and technical activities.
According to data adjusted for season and work days, which is used for comparisons within the EU, Slovenia's economy expanded by 8.3% year-on-year in the second quarter. It grew by 0.9% on the quarter before.
The Statistics Office will present more detailed data at a news conference on Thursday.
STA, 30 June 2022 - Slovenia's annual inflation rate accelerated to 10.4% in June, up 2.3 percentage points from May, driven by rising prices of petroleum products, food and electricity, the Statistics Office said on Thursday. The monthly rate stood at 2.7%, an increase of 0.7 percentage points on the back of higher prices of electricity, vacation packages and food.
The annual inflation in June is the highest since 10.7% were recorded in July 1996. The last time annual inflation exceeded 10% was in September 1997, when it stood at 10.1%, while 10.3% were recorded in August 1996.
Higher prices of electricity, natural gas and other fuels contributed the most to the June rise on the annual level - 2.1 percentage points - with gas rising by 49.4%, heating by 43.6% and electricity by 29.4%.
This was followed by higher prices of petroleum products and food, which pushed inflation up by 1.9 percentage points. Prices of liquid fuels rose by 54.6%, and prices of fuels and lubricants for cars grew by 34.5%.
In the food segment, where prices went up by 12.8% year-on-year, bread and cereal products (16.2%) and meat (12.9%) recorded the biggest price hikes.
Meanwhile, the annual rate of inflation was moderated by 0.2 percentage points by cheaper services in the communications segment, where prices fell by 5.3%.
Measured with the harmonised index of consumer prices, an EU benchmark, Slovenia's annual inflation in June ran at 10.8%, which compares to 8.7% in May and 1.7% in June 2021, and the monthly rate stood at 2.3%.
The Statistics Office noted the jump came after inflation had been kept at bay in the first half of the year as a result of a lowering of excise duties on petroleum products, energy and cigarettes.
STA, 28 April 2022 - The Institute of Macroeconomic Analysis and Development (IMAD) has downgraded its growth forecast for Slovenia for this year from 4.7% to 4.2%. The new figures were disclosed by Finance Minister Andrej Šircelj on Thursday after the government eventually got acquainted with the IMAD's spring forecast.
The government's economic forecaster had drawn up its latest outlook a month ago but the outgoing government had decided not to get formally acquainted with the document ahead of the 24 April general election.
IMAD expects growth to slow down to around 3% over the next two years. Presenting the forecast, IMAD director Maja Bednaš said they had expected a slow-down due to rising energy prices and disruption in supply chains before the war in Ukraine, which, however, only further increased those pressures.
The forecast had thus been drawn up against the backdrop of substantial uncertainty due to the war in Ukraine, with another factor being a reduced scope of measures in support of post-pandemic recovery.
This year's growth is expected to rely substantially on domestic spending, where the growth in private consumption is expected to slow down, partly as a result of higher inflation. Consumption of services is to grow in particular in the wake of Covid-19 restrictions.
IMAD expects investment growth to remain at high rates as well as growth in exports, which is to slow down due to the impact of the war in Ukraine and its fallout on merchandise exports.
The country's GDP growth is expected to slow down to 3% next year and down further to 2.8% in 2024.
According to Bendaš, the biggest risks to the forecast are linked to the developments in the war in Ukraine and energy prices with a further negative risk still posed by Covid-19 and increasingly by supply chains.
Russia and Ukraine represent about 3% of Slovenian exports, which Bendaš said was not a substantial exposure, but she noted greater exposure of the pharmaceutical, chemical and electricity equipment industries.
Inflation is expected to remain high; this year it is expected to run at 6.4% before falling to 3.2% in 2023 and 2.3% in 2024.
Employment is expected to increase by 1.7% this year as the number of registered unemployed is to drop to roughly 61,000 at the end of the year.
A further improvement in the labour market is expected over the next two years, "but less intensely than this year given the slightly lower growth in economic activity and demographic trends that are reducing the size of the working-age population," said the IMAD director.
At a government press conference earlier today, Minister Šircelj talked about why the government had delayed signing off the IMAD forecast. "Looking back at a few reports, they all put the economic growth rate lower than the actual rate," he said. IMAD forecast 6.1% growth for 2021 in the autumn, but the actual rate according to initial estimates by the Statistics Office was 8.1%.
"For me as finance minister it's important that such a forecast is as accurate as possible [...] Firstly, it expresses either optimism or pessimism, in this case pessimism, and secondly, such data can actually lead to the government or the ministry making wrong decisions," said Šircelj.
In late March IMAD commented on the delay by saying that given all the available data, information and assumptions, its forecast was realistic and there were "no substantive or technical reasons for a correction".
The International Monetary Fund has forecast for the Slovenian economy in light of the war in Ukraine and its fallout on the global markets to expand by 3.7% this year, down 0.9 points from its previous forecast, and by 3% next year, down 0.6 points.
The Slovenian Chamber of Commerce and Industry also expects the country's GDP to grow by 3.7% this year and by 3.2% in 2023.
STA, 28 February 2022 - Slovenia recorded an annual inflation rate of 6.9% in February, with the surging prices of energy being the main contributing factor. Inflation on a monthly level was at 1.4%, the Statistics Office reported on Monday.
Compared to February 2021, the prices of goods were up by 8.5% on average, and the prices of services by 3.7%.
Contributing 1.3 percentage points to the annual inflation rate in February were the higher prices of energy, gas and other fuels (by 19.6%), with the price of electricity increasing by 15%.
The price of gas was up by 25.6%, of liquid fuels by 10.3%, of solid fuels by 11.6% and of heating by 52.1%.
A 26.6% increase in the prices of fuels and lubricants for motor vehicles added one percentage point to the inflation rate in February, as did the higher prices of food (up by 6.4%).
The inflation rate was meanwhile offset by 0.2 of a percentage point by the lower prices in the communications category (-3.6%).
Inflation on a monthly level was at 1.4% in February, with the more expensive food (+2.1%), electricity (+8.4%) and holiday packages (+10.4%) being the main contributing factors.
On the other hand, the prices of footwear were down by 2.7%, of natural gas by 6.7% and of goods and services in the healthcare category by 1.1%.
Measured with the harmonised index of consumer prices, an EU-wide standard, Slovenia's annual inflation ran at 7% in February, and monthly inflation ran at 1.1%.
STA, 28 February 2022 - Driven by stimulus-fuelled domestic spending, Slovenia's economy expanded by 8.1% in real terms in 2021 after a 4.2% contraction the year before. In nominal terms it was up 10.9%, show preliminary estimates released by the Statistics Office on Monday. In the fourth quarter GDP grew by a seasonally adjusted 5.4% year-on-year.
Domestic spending surged by 10.8% year-on-year, with final consumption, growing at 9.4%, having a bigger impact on headline growth than investments, although investments expanded by 15.5%, according to the statisticians.
External demand improved as well, but with imports significantly outpacing exports, the trade surplus and hence the impact of exports on GDP actually.
Total employment stood at 1,054,000 at the end of the year, rising by 1.4% over the year before. Employment increased the most in manufacturing, construction, human health and social work activities, and in administrative and support services.
Quarterly figures show GDP growth accelerating, from 1.3% in the third quarter to 5.4% in the final quarter.
STA, 12 November 2021 - A potential new lockdown would cause the state to go bankrupt, Economy Minister Zdravko Počivalšek said on Friday during a government visit to the south-east Slovenia. He said the Covid crisis was not over yet, so everyone should join forces to find solutions as "there will be no more state aid".
Speaking at a debate in Novo Mesto hosted by the regional branch of the Chamber of Commerce and Industry and the Novo Mesto Development Centre, he pointed to the different dilemmas regarding the proposals for restrictions to deal with the medical crisis.
He urged people to act in a responsible way to preserve their own health and the health of others, and said that Covid-19 was being abused for a "sick battle against the establishment".
The latest Covid restrictions are the last attempt at restricting the medical crisis, he said, adding that he was advocating the introduction of the PC rule, meaning only those who have recovered from Covid or have been vaccinated would get the Covid pass.
"We cannot not allow for a handful of people to hold the country hostage," he said, adding that another lockdown would not work.
Počivalšek also presented to local business executives the options for drawing EU funds from the recovery and resilience fund, as part of which the Economy Ministry expects EUR 427 million in grants for investments.
On the sidelines of the debate Počivalšek hinted in a statement for the STA that the validity of tourism vouchers could be extended beyond this year if their use will not be possible due to Covid restrictions. He said a decision on this would be made before the end of the year.
As part of the government visit, Počivalšek visited several companies in Ribnica, Kočevje and Novo Mesto today.
STA, 12 October 2021 - Economist Velimir Bole told the Portorož Business Conference on Tuesday that the economic outlook for 2022 was relatively favourable, as the external factors were expected to calm down, including the growth in prices of raw materials. He nevertheless noted that events that trigger uncertainty could happen any time.
Short-term price expectations are very high, including in industry, construction sector and services, and only in commerce they are at ordinary levels, Bole told the first day of the two-day conference hosted by the publisher Finance.
The scientific advisor at the Economic Institute of the Ljubljana Faculty of Law added that short-term expectations regarding production activity and employment in industry and construction were at the 2016-2018 level.
The external factors of business are expected to calm down in 2022, and when it comes to global prices of raw materials, growth is expected to drop below 4% a year.
Bole said that the consensus forecasts of economic growth in the eurozone, Southeast Europe and Slovenia ranged from 4.2% to 4.6%.
Presenting the trends during the Covid-19 pandemic from March 2020 to the beginning of 2021, he noted that expenditure in Slovenia had increased at a higher rate than in the eurozone on average and in Southeast Europe.
However, this has not had as favourable effect on the gross domestic product (BDP) or social security, Bole said.
Comparative data on added value, employment and hours worked also show that the measures taken by the state, in particular subsidies to companies for workers who were not able to work, have not been very well targeted.
There was excessive support for industries that were not strongly affected by the closure of public life, while there was too little support in industries that were the most affected - commerce, transport, warehousing and hospitality, Bole said.
The economist noted the high increase in the general government sector debt. While he does not claim that high debt will not be sustainable in "normal" circumstances, it will be important how Slovenia will be perceived by investors.
The expected calming down of the growth in prices of raw materials reduces the probability of the European Central Bank "pulling the handbrake", i.e. introducing a stricter monetary policy. If it does, consequences will come quickly.
"Forecast for next year is favourable ... and debt will be sustainable if what happened in the eurozone, when mark-ups increased and the ECB started to intervene, does not happen here," Bole added.
According to him, an increased debt will reduce the potential of the state to support long-term technological restructuring as part of green transition and for some other major fiscal commitments, such as investments in healthcare.
STA, 1 July 2021 - The European Commission endorsed on Thursday Slovenia's EUR 2.5 billion national recovery and resilience plan. Pending confirmation by member states, Slovenia will be able to draw EUR 1.8 billion in grants and EUR 705 million in loans under the Recovery and Resilience Facility (RRF).
Slovenia will spend the funds, equivalent to 5.4% of the country's GDP, to support 33 reforms and 50 investments laid out in the plan.
Member states had to strike a balance between reforms and investments in their national plan, and comply with the condition that 37% of funds are set aside for green goals and 20% for digital goals.
Slovenia's plan earmarks 42.4% for green transition goals and 21.4% for digital goals, with 30% set aside for the promotion of smart and inclusive growth, 15% for health, and 13% for digital transformation.
Slovenia plans to spend EUR 230 million on energy efficiency and seismic renovation of buildings, EUR 292 million on investments in railway infrastructure, and EUR 54 million on drinking water supply.
In the digital segment, EUR 114 million has been set aside for digital literacy and lifelong learning, EUR 83 million for digitalisation of healthcare, and EUR 44 million for the digital transition of business.
EUR 79 million in spending is planned to set up a long-term care system, EUR 110 million for increasing the resilience of the health system, EUR 60 million for affordable housing, and EUR 28 million for a faster entry of the young into the labour market.
To boost productivity and innovation, Slovenia plans to spend EUR 305 million to support private investments and reforms to improve the business environment.
The Commission said the Slovenian plan includes "an extensive set of mutually reinforcing reforms and investments that contribute to effectively addressing all or a significant subset of the economic and social challenges outlined in the country-specific recommendations."
It includes important reforms on long-term care, healthcare, pensions and labour market, education and skills, R&D and innovation, business environment and public procurement.
The plan represents "a comprehensive and adequately balanced response to Slovenia's economic and social situation, thereby contributing appropriately to all six pillars referred to in the RRF Regulation."
The Commission assessed the plan across eleven categories, giving ten As and one B.
Confirmation by the Council is expected within four weeks, whereupon an agreement will be signed and Slovenia can get EUR 231 million in pre-financing. Individual payments will be carried out according to the agreement, either in full or on a pro rata basis.
STA, 29 June 2021 - The European Bank for Reconstruction and Development (EBRD) has upgraded by 1.5 percentage points its GDP growth forecast for Slovenia in 2021 to 5%. The institution expects that Slovenia's economy will expand by a further 4% next year.
The updated forecast, published on Tuesday, comes after the autumn projection in which the EBRD said it expected the country's GDP to expand by 3.5% this year.
The bank noted that the Covid-19 pandemic had significantly affected the Slovenian economy last year, with GDP dropping by 5.5%. This is, however, 2.5 percentage points fewer than projected by the EBRD last autumn.
It said that the key factors of the contraction were private consumption and investments, which were down 9.7% and 4.1%, respectively.
Slovenia, as a small and open economy strongly integrated in global value chains, also felt shocks in international trade, although exports of goods started recovering by the end of last year, the report says.
While exports of goods continue to grow, exports of services remain well below the pre-pandemic level. On the other hand, investment activity had experienced a rapid recovery by the end of 2020.
The EBRD expects the general government deficit, which last year reached 8.4% of GDP, to increase this year to 8.6%, as the government has largely kept implementing an expansive fiscal policy.
The bank says that vaccination and gradual relaxation of measures to stem the pandemic will lead to gradual recovery of consumption and services, while exports of goods and investment will continue to support economic growth.
The EBRD also warns against short-term risk factors, as new waves of coronavirus infections could restrict the recovery of the tourism sector and other services, while disruptions in supply chains could affect production and exports of goods.
GDP forecast/time of projection 2021 2022 2023 ------------------------------------------------------------- Banka Slovenije/June 2021 5.2% 4.8% 3.1% OECD/May 2021 3.5% 4.6% IMF/May 2021 3.9% 4.5% 3.6% European Commission/May 2021 4.9% 5.1% IMAD/March 2021 4.6% 4.4% 3.3% EBRD/June 2021 5.0% 4.0% ------------------------------------------------------------- Source: Individual forecasts
STA, 16 June 2021 - Slovenia's central bank has markedly upgraded its economic growth forecast for the country since December and is now projecting the economy to expand by 5.2% this year, up 2.1 percentage points, followed by a 4.8% growth in 2022, up from the 4.5% forecast in December.
Banka Slovenije thus expects GDP to return to pre-crisis level at the beginning of next year. Further afield, the central bank has kept its projections unchanged, which means it still expects GDP growth to ease to 3.1% in 2023.
Presenting the latest outlook at a press conference in Ljubljana on Wednesday, Vice-Governor Jožef Bradeško noted the persistently demanding environment and great uncertainties.
"[The uncertainties] have been reduced in terms of the pandemic but remain high. They are also high with respect to geopolitical developments," he said.
While the recovery will depend on the health situation, and uncertainties due to disruptions in supply chains, growth will be driven by domestic and foreign demand.
"We expect a recovery in household spending as well as increased investment activity by the private sector and the state," said Arjana Brezigar Masten, the head of the central bank's analytics and research centre.
Inflation will rise but is expected to remain below the central bank's mid-term target of 2%. It is expected to run at 1.3% this year, mainly due to the effect of last year's dip in prices of energy products, and then rise to 1.6% in 2022 and 1.7% in 2023.
The investment drive is expected to be reinforced with investment co-funded by the EU's Next Generation fund. State investment is expected to contribute a good two percentage points to GDP growth in three years, most of which this year.
Against such a backdrop, companies are expected to kick-start investment in equipment and machinery with a further boost to investment expected to come from private investment in housing.
The central bank also expects an "encouraging" growth in exports driven by a recovery of economic activity in Slovenia's trading partners, but Brezigar Masten said the effect of net foreign trade on GDP would be rather small as imports are expected to grow as well.
The most important engine of growth will be private spending, which is expected to grow at an average rate of 4.7% between 2021 and 2023 as monetary policy measures are keeping financing terms favourable.
The rate of saving is expected to gradually decrease in the coming years, but is to stay slightly above the pre-crisis levels.
"We expect robust growth in spending on non-essential durable goods and semi-durable goods such as cars, and substantial demand for accommodation and hospitality services, also owing to redemption of tourism vouchers. We expect consumers will redeem about half of the vouchers that they haven't used already," said Brezigar Masten.
