The Slovenia Times

Govt forecaster corrects outlook to a milder contraction


"The virus will be present for quite a while longer," IMAD director Maja Bednaš told reporters in Ljubljana as she presented the corrected outlook, which will serve as a basis for the government to draw up a supplementary budget.

The think-tank expects occasional volatility in economic activity related to reimposition of protective measures until a Covid-19 vaccine has been developed and applied massively.

The biggest contraction is expected in the second quarter when Slovenia's GDP could fall by between 13% and 15%.

"The deepest fall is expected in commercial services such as retail, hospitality and tourism," Bednaš said, adding that value added was expected to contract in many industries, including manufacturing and construction.

A recovery is expected in 2021 but it will be gradual and at differing paces from one sector to another. Most activities will not yet return to pre-coronavirus levels next year.

IMAD expects exports to drop by 15.9% this year, to be followed by 9.7% growth in 2021. Meanwhile, imports are to contract by 16.2% this year and grow by 10.1% next year.

Bednaš noted that economic forecasts in Slovenia's key trade partners deteriorated as well, as most countries expect recessions of historic proportions.

Private spending is to decrease by 6.9% this year and grow by 4% the next, while state spending is expected to grow 3% this year and 0.7% in 2021.

Moreover, the number of unemployed is to exceed 94,600 this year and reach 102,700 in 2021. Registered unemployment is to reach 9.8% this year and climb to 10.5% next year.

Bednaš warned of considerable downward risks involved in the forecast related to potential repeats of major outbreaks. A potential reimposing of lockdowns could lead to a more substantial contraction.

"The GDP could drop by another two to three percentage points, while bankruptcies and layoffs could slow recovery next year," she said.

There is also the possibility of a faster recovery than projected given a faster development of a vaccine or medicine and a more successful and lasting containment of the contagion.


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