Bank of Slovenia Expects More Unemployment, Lower Wages When Covid-Support is Removed

By , 08 Jul 2020, 12:12 PM Business
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STA, 8 July 2020 - Banka Slovenije has pointed out that the government's corona-crisis stimulus measures are having a marked effect on the labour market and that employment and wage statistics could deteriorate significantly once they are lifted. The central bank added that a deterioration on the labour market was also heralded by surveys conducted among companies.

Banka Slovenije's latest quarterly report, released on Wednesday, also says Slovenia suffered a strong decline in GDP in April, the prospects for the second half of the year are, however, more favourable.

The central bank pointed to a survey by the Statistics Office, which suggests demand will increase substantially in the third quarter, while it simultaneously projected a deterioration of the labour market situation in the second half of the year.

The financial situation of businesses meanwhile remains stable, which Banka Slovenia attributes to ample liquidity reserves, favourable bank financing, labour costs subsidies, the possibility of deferred tax payments, as well as the government's loan guarantees scheme.

On the other hand, the state's fiscal situation has deteriorated significantly. Revenue in the first five months decreased year-on-year by EUR 720 million or 9.2%, while expenditure was up by EUR 874 million or 11.4%.

The state deficit could reach around 8% of GDP this year, whereas public debt could rise to 2015 levels, when it stood at a record 82% of GDP.

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