A big achievement in the first quarter
"This is the fastest rate of economic growth in Slovenia since the second quarter of 1999, when a spending rush ahead of the introduction of value added tax provided a one-time boost to growth," said Karmen Hren of the Statistics Office. It is also the fifth consecutive quarter that the economy has expanded at near or above 5%.
Slovenia's exports were the main motor of growth in the first quarter, expanding by 13.6% compared to the same period a year ago, imports also grew robustly (13.7%). The economic growth figures did not come as a surprise, since all indicators had been pointing to the fact that the economy was in good shape.
This was echoed by Economy Minister Andrej Vizjak, who said in his response to the data that his ministry was pleased with the growth rate. "It seems the measures taken by the government and other players are the right ones and that they have bolstered the positive mood in the economy," said Vizjak. He added that the ministry had been looking forward to strong growth given the trends in exports and investments. "But I must admit that we are pleasantly surprised by the final figure," said Vizjak, who termed the growth rate "a big achievement".
The Institute for Macroeconomic Analysis and Development (IMAD), the government think tank, said it had expected the fast economic growth. "The data at IMAD's disposal had suggested growth could stand anywhere between 7% and 7.6%," said IMAD director Janez Šušteršič. According to him, this is very healthy structural growth that is not expected to cause significant inflation in the coming months. Šušteršič pointed out that the growth was being generated by strong production and exports, while domestic consumption was mostly subdued. Šušteršič is confident that the extensive investment is an indicator that the growth can be sustained in the future.
Gross fixed capital formations expanded by 21.6%, contributing significantly to the overall growth. The high investment spending was fuelled by a flourishing construction sector, which with the help of a warm winter expanded by nearly 30% compared to last year. The motorway construction led the way. Strong growth was also witnessed in the manufacturing sector, which expanded by 10.9%, one of the best results in 15 years. Meanwhile, growth of domestic consumption remained flat at 3%, with household consumption up 3.4%.
The favourable economic situation was reflected in the highest rate of employment in Slovenia ever, with the number of persons in employment rising 2.4% to 936,000. The biggest growth was registered in construction, where the number of employed grew by nearly 10%.Slovenia's economists have hailed the rate of growth and predicted a bright future. Sašo Polanec of the Ljubljana Economics Faculty said the current robust growth was a result of Slovenia's integration into the common EU market, the strong consumption demand in Germany and the fast growth of Slovenia's construction sector. "If this rate of growth continues, Slovenia will catch up with Italy in terms of GDP per capita within three to four years," said Polanec. He added that the strong demand in Germany, Slovenia's main export market, was a result of the recent reform of Germany's labour legislation, which had improved productivity in Europe's biggest economy.