STA, 31 May 2019 - Slovenia's economy continues strong with the latest data showing that the GDP expanded at an annual rate of 3.2% in real terms in the first quarter of the year and by as much as 3.7% when adjusted for season and working days.
Although growth in real terms slowed down from the 4.1% recorded in the previous quarter, seasonally adjusted rate of growth ran slightly above the 3.6% recorded in the final quarter of 2018.
Seasonally adjusted quarter-on-quarter growth was 0.8%, data from the Statistics Office (SURS) show.
Contrary to expectations by analysts, the slowdown was not provoked by external demand as the growth of exports gathered pace compared to the previous two quarters, but rather by a slowdown in domestic expenditure.
Domestic expenditure grew by 1.8% year-on-year in the first quarter, the lowest rate of growth in at least three years, with the biggest impact coming from a 1.3% decline in gross capital formation, SURS official Romana Korenič told reporters in Ljubljana on Friday.
Changes in inventories had a markedly negative impact on GDP growth, as much as 2.1 percentage points.
Gross fixed capital formation increased by 9.3%, which is on a par with the previous quarters. Construction investment expanded by as much as 18.1% but investment in machinery and equipment slowed down to 4%.
Businesses reduced inventories by 2.1%, the reason for which is not clear yet. Korenič said a potential reason could be a drop in orders, although business sentiment data or export growth do not suggest that.
Domestic expenditure was thus fuelled only by final consumption expenditure, which grew by 2.9%, a somewhat higher rate than in the previous three quarters.
Driven mainly by an increase in public sector pay at the beginning of the year, government final consumption rose by 3.6%, whereas household consumption increased by 2.6%, however Korenič said that the latter contributed more to the final consumption growth than government spending.
The statisticians noted a slowdown in household expenditure for durable goods, in particular cars. However, daily purchases of goods such as food, beverages, fuel and some types of services increased.
After a somewhat lower growth of exports in the third and fourth quarters of last year (5.4% and 6.8%), exports expanded by 7.6% year-on-year in the first quarter.
Imports increased at a slower pace (6.4%), which resulted in high external trade surplus. This time it contributed 1.6 percentage points to GDP growth.
Employment keeps increasing but with signs of a moderation. The number of people in work in the first quarter rose by 2.6% year-on-year to 1,026,547.
Half of the new jobs were created in manufacturing and construction, with livelier hiring also observed in transport, trade, and professional, scientific and technical activities.
Running at 3.2%, growth in real terms was the slowest since the final quarter of 2016 when it ran at 3%.
STA, 21 May 219 - The Organisation for Economic Co-operation and Development (OECD) has downgraded its forecast for Slovenia's gross domestic product (GDP) growth for this year by 0.2 percentage points to 3.4%, while upgrading the 2020 forecast by 0.4 points to 3.1%.
In the forecast published on Tuesday, the OECD said that Slovenia's economic growth remained strong, being powered by the solid domestic consumption.
Domestic consumption is supported by the improving situation on the labour market, growth of wages in real terms and a high consumer confidence rate.
The EU structural funds, the companies' needs for additional production capacities and favourable financing conditions are maintaining a strong investment growth, while exports are slowing down due to lower demand.
The OECD expects that private consumption will increase this year by 3% (3.1% in 2020), state investments by 2.2% (1.9% in 2020), companies' investments in fixed assets by 8% (7.2% in 2020), exports by 5.8% (7% in 2020) and imports by 5.2% (5.9% in 2020).
Employment continues to grow, with hiring of foreign workforce also being on the increase, the OECD said, adding that the shortage of workforce was nevertheless the highest in the last ten years.
The Paris-based organisation noted that Slovenia's fiscal policy for this year was expansive, while that for 2020 was neutral, adding that Slovenia should make its fiscal policy stricter to keep inflation pressure in check and ensure fiscal sustainability.
Measures such as restricting early retirement and facilitating privatisation would contribute to mobilising labour resources which are not fully utilised at the moment, and make labour force available to fast-growing industries, the OECD added.
It said it expected economic growth in Slovenia to slow down in 2019-2020, adding that the higher domestic demand and growth of investments would be covered with higher imports.
Given the weaker demand from abroad and higher labour costs, the growth of exports will slow down, while the employment rate will drop below the natural rate, which is expected to facilitate wage growth and increase inflation.
Slovenia's economic growth could be higher than projected if households save less and increase consumption, or lower than projected if companies fail to increase their production capacities to the expected level.
This could result in a drop in their competitiveness and lower exports, the OECD said, adding that economic growth in Slovenia could also be negatively affected by a possible strong real estate market correction.
STA, 8 May 2019 - The Slovenian economy as a whole significantly improved its performance last year, with total net profit of companies increasing by 16% and total revenues by 9%, according to the Agency for Public Legal Records (AJPES).
The total net profit posted by Slovenian companies surpassed the total loss for the fifth year in a row in 2018, standing at EUR 4.2 billion, up 16% year-on-year.
The 66,749 companies which submitted their business results for last year to AJPES meanwhile increased their combined revenue by 9% to EUR 100.8 billion.
Revenues generated on the foreign markets amounted to EUR 40.7 billion, which is 10% more than in 2017.
Slovenian companies also hired new employees at a facilitated pace last year, with the number of employed persons measured by hours worked increasing by 29,517 compared to 2017 to 503,326.
Employees received an average wage of EUR 1,652 gross last year, or EUR 65 gross more than in 2017. Net added value per employee was up by 2% to EUR 44,415.
AJPES will present a more detailed analysis of annual reports of Slovenian companies at a press conference next week.
STA, 19 April 2019 - Tourism contributed EUR 5.7bn or 12.3% to the Slovenian gross domestic product (GDP) in 2018, according to a report by the World Travel and Tourism Council (WTTC). The sector employed 110,700 people or 12.8% of total employment.
The annual contribution of tourism to the Slovenian GDP increased by 6% compared to 2017, the Slovenian Tourist Board said.
In Europe, tourism contributed 9.7% to the GDP last year, an increase of 3.1 percentage points over 2017. Some 36.7 million people or 9.7% of all working Europeans were employed in the sector.
On a global scale, the tourism and travel sector directly and indirectly contributed EUR 7.825bn or 10.4% to the global GDP. The sector employed some 319 million people.
This year, tourism's contribution to the global GDP is set to increase by an additional 3.6%. The WTTC estimates that the total number of people employed in the sector globally will increase by 2.9%.
All our stories on travel and tourism in Slovenia are here
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.