IMAD: Further economic recovery uncertain, especially in services
Ljubljana - Sentiment indicators for September and October show economic recovery is uncertain as the Covid-19 epidemic is worsening, says the government's macroeconomic forecaster. The eurozone economy is losing momentum, and so is Slovenia's, as the country saw a drop in business sentiment in October following a several-month improvement.
As the epidemic started worsening in October with new restrictions kicking in, the month's sentiment indicators showed a weaker trust in the Slovenian services sector, the Institute of Macroeconomic Analysis (IMAD) says in its latest Economic Mirror publication.
Sentiment remained positive in manufacturing, while no major changes were recorded in electricity use and cargo transport as short-term indicators of activity.
IMAD says all this indicates that declaring the epidemic for the second time this year in October will have a major impact on the services sector.
Still, the economic impact and the consequent restrictions to businesses could be less intensive than in the spring episode of coronavirus.
The outbreak of the epidemic in the first nine months had a major impact on companies' ability to do business and their ability to pay.
This could be felt in practically all sectors, but especially the ones having hardest time adapting to the changed situation - services, hospitality, transport, construction, culture and entertainment.
A drop in business also had a negative impact on the indicator of indebtedness, which in turn affected payment ability and increased overdue liabilities.
The first wave of the epidemic hit sole proprietors particularly hard, with their overdue liabilities almost doubling in the first nine months compared with the same period last year.
The numbers of insolvency and receivership procedures starting anew dropped compared to the same nine months in 2019, which IMAD attributes "mostly to the adoption of emergency measures and partly to courts not working during the emergency".
IMAD also notes that labour market indicators in the third quarter did not further deteriorate, which it attributes to companies returning to business in summer months and to the stimulus measures being extended.
As a result, the number of employed persons in August remained at a comparable level to July and June.
However, hospitality and miscellaneous businesses saw a major drop in employment, of -6.2% and -12.6%, as the sectors most severely affected by lockdown.