STA, 13 April 2019 - Finance Minister Andrej Bertoncelj met representatives of the World Bank and the IMF on the sidelines of the two organisation's spring meetings in Washington to highlight Slovenia's effort to find the right balance between fiscal stability and prosperity for its people.
The Slovenian delegation, which also included Banka Slovenije governor Boštjan Vasle, met several senior World Bank and IMF officials, including IMF deputy director Carlo Grasso, deputy director of the IMF's Institute for Capacity Development Gerd Schwartz, and the World Bank's regional vice president Cyril Muller, the Finance Ministry wrote.
Highlighting the cooling of the global economy, increased risks and continuing expansionary monetary policy, the latter stressed the need for appropriate fiscal policies and structural reforms meant to improve productivity, the business environment and growth.
Slovenia's representatives explained the government was pursuing a fiscal policy that would strike the right balance between fiscal stability on the one side and development and prosperity on the other.
The Slovenian delegation also met representatives of credit rating agencies S&P, Fitch, and Moody's, briefing them in separate meetings on Slovenia's performance.
"The talks showed that the assessments of the economic situation for Slovenia are positive and that we are among the countries for which the agencies are preserving a positive outlook despite the cooling in the international business environment," the ministry's press release says.
Minister Bertoncelj told the STA that IMF and World Bank representatives were content with the government's fiscal and reform plans for the coming years.
They were particularity happy about the planned general government budget surplus - 0.8% this year an 1% in 2020 - and about the plans to reduce public debt.
"We're aware our debt is high, nominally at EUR 32bn, with the bulk of it, around EUR 24bn, stemming from budget deficits. Thus they find our planned path - surpluses and debt reduction - to be correct," he said.
Bertoncelj added that implementing structural measures would also be crucial. He presented plans to reduce the tax burden for labour and increase it for capital, as well as pension system and labour market measures. He said the assessment were very positive.
Earlier this week, the IMF downgraded the global growth forecast by 0.2 percentage points compared January to 3.3% for this year, mainly because of the poorer than expected trends in China and in Europe.
However, Slovenia is not expected to be affected as yet, with the IMF forecasting the economy to expand at a rate of 3.4% this year before the pace slows down to 2.8% in 2020 and then gradually to 2.1% by 2024.
STA, 13 April 2019 - The downturn in Germany's economy has not yet had a significant effect on Slovenia's economy, although automotive suppliers exporting to Germany have started to see a slight drop in orders.
Gertrud Rantzen, the president of the Slovenian-German Chamber of Commerce, has told the STA in Bled this week that there are several reasons for the slowing of Germany's economy, among them uncertainty caused by Brexit and the intention of the US to raise tariffs on imports.
She said that the signs of slowing are most evident in manufacturing industry, as this sector sees a decline in investment funds in times of uncertainty.
Rantzen does not believe that Germany faces a crisis as severe as the one decade ago, but she does not exclude the possibility. She believes much will depend on Brexit and the relations between Europe and the US.
The automotive industry, which has started to feel the effects of the downturn, is well prepared for such fluctuations in economic trends, said Rantzen.
She believes that most countries are following economic indices closely and are well-prepared, so it is not likely that crisis as severe would repeat.
Marko Gorjup, the boss of the Novo Mesto-based TPV group, an automotive supplier, told the STA at the sidelines of an exporters' conference in Brdo pri Kranju this week that there had been a slight decrease in orders in autumn.
The decrease is "nothing drastic" and the company is optimistic that the situation will stabilise in the second half of the year, he said.
The economic slowdown has not yet been felt in construction, Igor Kastelic, the director of Rem Trebnje, a module building maker, told the STA at the conference.
"In the first quarter, our revenue was about 15% higher than last year, with Germany accounting for the majority of our sales," said Kastelic, implying that the company was barely keeping up with orders.
Moreover, Marko Lukić, the boss of Lumar, a maker of prefabricated houses, said in mid-March at an event hosted by PwC and KD Skladi that the company's production lines were booked for the next year and a half.
He noted however that the construction sector would be the last to feel a potential economic crisis due to its long investment cycles.
STA, 29 March 2019 - Slovenia recorded a general government surplus of EUR 303m last year or 0.7% of the country's gross domestic product (GDP), the Statistics Office reported on Friday, the biggest surplus on record.
While Slovenia recorded a general government a surplus of EUR 5m or 0.01% of GDP in 2017, it significantly increased last year.
"This is the first time such a high surplus was recorded since such data have been monitored, i.e. since 1995," Nina Stražišar of the Statistics Office told the press in Ljubljana.
Expenditure continued to grow, but at a slower pace than revenue. Revenue rose by 1.178bn or 6.3% year-on-year while expenditure was up by 4.7% or EUR 881m.
Due to the favourable conditions on the labour market and economic growth, the state collected EUR 649m more in taxes than in 2017. Revenue from value added tax (VAT) was up by 8.1%, while revenue from income and property taxes rose by 10.2%.
Revenue from taxes and social security contributions increased by 7%, while the good performance of companies in which the country holds ownership stakes resulted in a 21% rise in non-tax revenue from dividends.
On the other hand, expenditure for gross investments in fixed assets surged by 24.9% and for subsidies by 8.6%. Expenditure for intermediate consumption increased by 7% and spending for welfare payments by 3.5%.
This implies there was an acceleration in the drawing of EU funds in the second half of 2018, Stražišar said.
The state meanwhile reduced interest expenditure by 15% due to refinancing of outstanding debt with new bonds with lower yields and repurchase of a portion of bonds denominated in US dollars.
Interest expenditure excluded, the growth of expenditure would be 6% and general government surplus would amount to EUR 1.2bn or 2.6% of GDP.
The Finance Ministry has projected that general government surplus will slightly increase this year, to 0.8% of GDP.
Consolidated general government debt amounted to EUR 32.23bn or 70.1% of GDP, which is 3.9 percentage points down compared to 2017.
Contributing the most to the reduction of debt was the nominal growth of GDP. In nominal terms, general government debt increased by EUR 371m or 1.2%.
More detailed data can be found here
STA, 22 March 2019 - The government macroeconomic think-thank has estimated that the direct impact of a no-deal Brexit on Slovenia would be small, while the indirect impact through the countries with which Slovenia does most of its trade would be greater but also harder to measure.
The Institute of Macroeconomic Analysis and Development (IMAD – Urad RS za makroekonomske analize in razvoj) has found based on various studies that the long-term effect of a no-deal Brexit on Slovenia would be between -0.2% and 1% of gross domestic product (GDP).
Meanwhile, the impact of an orderly exit of the UK from the EU would be smaller, estimated at between -0.1% and -0.25% of the country's GDP.
This would hold true in the case of the confirmation of the current Brexit agreement, which envisages the UK remaining part of the customs union, IMAD said in its latest publication on macroeconomic trends.
"Introduction of customs duties would decrease the volume of bilateral trade between Slovenia and the United Kingdom, with the electrical, automotive, pharmaceutical and metal industries suffering the largest negative effect."
According to the think-tank, also to be somewhat affected would be exports of services, in particular tourism and transport.
Since the direct connection of the Slovenian and British economies is relatively small (Slovenia generates 1.9% of its exports in the UK), the direct negative effect on exports and GDP would be small.
An indirect effect would be somewhat bigger due to Slovenia's trade connections with Germany and France, which are major trade partners of the UK.
All our stories about Brexit are here
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.
All our stories about the Slovenian economy are here
STA, 6 March 2019 - The government managed to get the revised budget for 2019 through parliament on Thursday with the help of the opposition Left. But the vote does not end uncertainty over this year's spending, as the upper chamber has indicated a veto was possible and the Left may make its support in a re-vote conditional on additional spending.
The supplementary budget sets expenditure at EUR 10.16bn, a rise of EUR 463m or 4.8% from the original budget. Revenue is to go up even more, by 6.2% or EUR 599m to EUR 10.35bn, exceeding EUR 10bn-mark for the first time, mostly due to significantly higher public sector wages.
The adjustments increase funding for almost all ministries despite warnings from the centre-right opposition and the Fiscal Council that such spending hikes risked setting up Slovenia for trouble now that economic growth had started to cool down.
The government has rejected criticism with the argument that the spending blueprint was treading a middle path between exclusive focus on welfare and excessive austerity. It insists the budget is fiscally sustainable.
The budget was passed without the support of the opposition Democrats (SDS) and New Slovenia (NSi). The former argued that the government had ignored warnings of the Fiscal Council, while the latter was bothered by the rejection of the amendments filed by the SDS, NSi and the National Party (SNS).
The three opposition parties had filed 34 amendments, mainly concerning the funding of infrastructural projects, but all of them were rejected.
But the SNS nevertheless supported the budget. According to party head Zmago Jelinčič, this was only to see how the European Commission will respond.
To secure passage, the government has had to reach a deal with the Left that entails additional spending potentially running into several hundred million euro on policies including precarious work forms, housing, corporate tax, wages, pensions and healthcare.
The initial plan was that the pact would be signed before today's vote, but due to apprehension by some coalition partners, in particular the Social Democrats (SD) and the Modern Centre Party (SMC), it was merely initialled after a half-hour recess in which the final details were hammered out.
The leader of the Left, Luka Mesec, said the deal was very similar to the one that was initialled with the government last summer. He expects it to be signed in the coming days.
In line with the deal, the leader and the secretary of the Left will from now on be invited to the meetings of coalition deputy groups every Tuesday.
The head of the deputy group of the ruling Marjan Šarec Party (LMŠ), Brane Golubović, rejected criticism that the agreement had not been coordinated with other coalition parties, saying that all ministries concerned had participated in the talks, including those led by ministers of the SMC and SD.
There has been some speculation that the pact with the Left may be sidelined after the budget is confirmed, but this would leave the budget vulnerable in the event of an upper chamber veto, which is possible given the balance of power in the chamber.
The National Council recently denied support to the budget, with councillors voicing complaints about government plans in the area of local government and regional development.
Any vetoed legislation would requires confirmation by 46 MPs in the 90-member National Assembly. The coalition only has 43 votes.
Prime Minister Marjan Šarec said he was not surprised by the threat of the veto. "I only hope to hear some solid arguments, because the ones I heard today are very shaky considering the wishes of those presenting them and are reminiscent of horse-trading," the PM said.
STA, 5 March 2019 - Slovenian chief financial officers (CFOs) expect a somewhat less positive outlook of the state of the economy this year, and point to operational cost management and lack of trained workers as the main risks to business, according to the 2019 survey by consultancy services provider Deloitte Slovenija.
"The main findings of the survey, which has been carried out for the 10th time in Central Europe and for the 8th time in Slovenia, are that CFOs expect growth to slow down.
"In Slovenia, they stressed that an unstable fiscal or legislative environment in general makes their business highly uncertain," Deloitte Slovenija director Barbara Žibret Kralj said as she presented the survey in Ljubljana on Tuesday.
With the minimum wage to rise in Slovenia, Slovenian CFOs expect labour costs to rise the most among all costs. And just like in 2018, they point to hiring adequately trained staff as one of the biggest problems.
The CFOs also expect the unemployment rate to rise, and see banks as the most popular lenders, with internal sources of funding also playing an important role.
Mojca Osolnik Videmšek from the Gorenjska Banka bank said the economy was deeply in an investment cycle, so the need for banks as sources of funds, also because of low interest rates, was there to stay.
This year's survey also focused on artificial intelligence.
More than three-quarters of CFOs in Central Europe and around 40% in Slovenia say their companies lack the support of artificial intelligence in decision-making processes.
In Slovenia, two-thirds of companies say artificial intelligence is important for the development of financial services, but are poorly prepared for implementation.
Slovenian CFOs also believe artificial intelligence will create many jobs in the medium term, but a quarter maintain it will make many jobs obsolete in the long run.
While firms compete globally to attract IT experts, Juri Sidorovič from Deloitte said directors not giving clear instructions and not setting goals was sometimes a problem.
"The problem is what a goal is, what we want, what can be modernised, what can be robotised," he stressed.
Deloitte Slovenija also commented on the tax reform presented last week, with Andreja Škofič Klanjšček saying it was more of a "correction since it brings no major changes".
She welcomed the planned changes to personal income tax to finally take the pressure off of those in the middle of the income scale, and exempting holiday allowance from all taxes.
However, Škofič Klanjšček is worried about the planned rise in corporate income tax from 19% to 22% and about the minimum taxation of 5% of all legal entities.
The participants of the news conference said raising the corporate income tax "is a bad signal to attract investors".
They also complained about the lack of a strategy in which the government would set goals to be achieved with tax changes.
Sidorovič said the state could for instance decided to promote IT and then take measures to implement such a strategy.
STA, 28 February 2019 - Slovenia's survey unemployment rate stood at 4.4% in the last quarter of 2018, which is the lowest rate since the last quarter of 2008, when it stood at 4.3%, the Statistics Office reported on Thursday.
Among the people aged between 15 and 29, the survey unemployment rate in the last quarter of 2018 was at 7.6%, or two percentage points lower year-on-year. The rate was the lowest in the 55-64 age group, at 3.8%.
The long-term unemployment rate dropped to 1.8% year-on-year, as the number of long-term unemployed persons was down by 35.6%, from 29,000 to 19,000.
In the last quarter of 2018, 45,000 persons were unemployed by ILO standards, which is 14,000 (24.3%) fewer year-on-year. The active population in Slovenia was up by 12,000 (1.2%) to 984,000.
The number of inactive persons was up by 4,000 or 0.6% to 729,000. More than half of them (394,000) were older than 65, while 7% or 47,000 of them were aged between 25 and 49.
STA, 28 February 2019 - Slovenia's gross domestic product (GDP) was up by 4.5% in real terms last year, preliminary data by the Statistics Office show. The economy expanded by 4.1% year-on-year in the last quarter of 2018.
Compared to the previous quarter, the economy grew by a seasonally adjusted 0.8% in the final quarter. In year-on-year comparison, it expanded by 3.6%.
In the whole of 2018, the seasonally adjusted GDP growth was at 4.6%.
In year-on-year comparison, the seasonally adjusted GDP growth was the highest in the first and third quarters, reaching 5.2% and 5.1%, respectively. In real terms, the economy expanded by 4.8% and 5.0%, respectively.
In the second and fourth quarters, growth reached 4.6% and 3.6%, respectively, according to the seasonally adjusted data, while in real terms it was at 4.1% for both quarters.
Last year's GDP growth figure is in line with the expectations of domestic and international institutions or slightly higher. It is, however, somewhat lower than in 2017, when the economy expanded at a 4.9% rate.
In its autumn forecast, the government forecaster IMAD put last year's GDP growth at 4.4%. The European Commission put it at 4.3% last November, while Banka Slovenije, the central bank, said in mid-December 2018 it should reach 4.2%.
The preliminary estimate puts GDP at current prices for 2018 at EUR 45.948bn, which is up 6.9% from 2017.
The final GDP figures for 2018 are due at the end of August.
Romana Korenič of the Statistics Office stressed at today's press conference that exports still played an important role in the GDP growth but that the role of domestic spending was becoming increasingly important.
In 2018, domestic spending was up by 4.6%, which the highest growth since 2007.
External demand continued to reflect positively on the economic growth although exports grew at a more moderate pace than in 2017. It rose by 7.2% last year, while it up by 10.7% in 2017. Imports, meanwhile, grew by 7.7%, which is 2.6 percentage points less than in 2017.
The external balance of goods and services contributed 0.3 percentage points to the GDP growth last year, which is much less than in 2017, when it added 1.3 percentage points.
Gross investment was up by 12.6%, which is 0.6 percentage points less than in 2017. Gross investment in fixed assets rose by 10.6%, which is level with 2017 (+10.7%).
The pace of growth of investment in fixed assets in construction became more moderate, Korenič, said. It was extremely high in the third quarter, rising by more than 20% year-on-year, but in the final quarter, the growth was only about 12%, which, however, is still pretty high, she noted.
The growth of company investment in machines and transport equipment also slowed down somewhat, while investment in buildings grew by 6%, which is the highest growth since the second half of 2016.
Final consumption increased by 2.3% (by 1.5% in 2017). Household consumption grew by 2.2% and government spending by 2.6%. In comparison, in 2017 government spending was up by a mere 0.5%.
The number of people in employment increased by 3% year-on-year to 1,017,000, which is the highest figure on record, meaning since 1995.
Asked about the outlook for GDP growth this year, Korenič said such forecasts were difficult to make. It is difficult to assess when the cooling down on the global level will reach Slovenia, she said.
Slovenian and international institutions expect GDP to grow at a rate of 3.3-3.7% this year.
STA, 7 February 2019 - Slovenia's export growth slowed to 9.2% in 2018 from over 13% in the year before. With imports growing at 11%, the trade surplus narrowed to the lowest level on record, the Statistics Office said on Thursday.
Exports amounted to a new record EUR 30.9bn and imports to an equally record EUR 30.6bn, but the trade surplus narrowed to just EUR 0.2bn from more than EUR 0.7bn in the year before.
The entire surplus is generated in trade with non-EU countries, while the trade balance with EU members has been negative for many years.
Germany remains by far the biggest trading partner, accounting for a fifth of exports and about a sixth of imports. Italy is in second place by exports and imports.
The neighbouring Croatia is also a major trading partner and also one of the few EU sources of surplus, with exports at EUR 2.5bn and imports at EUR 1.7bn.
Austria, on the other hand, accounted for EUR 3.2bn of imports and EUR 2.4bn of exports.
Overall, just five countries - Germany, Italy, Croatia, Austria and France - account for more than half of all trade.
Slovenia's main exports were vehicles, medical and pharmaceutical products and electrical machinery.
Vehicles are also the biggest single import group, followed by oil derivatives and electrical machinery.
While the whole-year figures are positive, the trend shows come cause of concern amidst warnings that the economies of Slovenia's biggest trading partners are slowing down.
December exports thus rose by just 2% year-on-year, with exports up 6%.
The Chamber of Commerce and Industry (GZS), which has been raising the alarm about a looming slowdown for a while, described the figures as "predictably weak".
The chamber expects export growth rates to hover in the 3-4% range in the coming months.
"We estimate that exports of the automotive chain could even be negative year-on-year in some months given that January data for the sector were the worst in six years," the GZS's chief economist Bojan Ivanc said.
More details can be found at SURS.