The Slovenia Times

Economy Contracts by 0.1%


Despite the drop, which comes after five consecutive quarters of growth, Slovenia's economy expanded by 0.8% in the first nine months of 2011 compared to the same period last year.

The trend however suggests that growth will be very weak at the end of the year, especially considering that the situation in the eurozone and the broader international environment is deteriorating, the Statistics Office said.

The Organisation for Economic Cooperation and Development (OECD) said on Monday that Slovenia's economy is projected to expand by 1% this year, but GDP growth is expected to slow to a mere 0.3% in 2012 before ticking up to 1.8% in 2013.

Growth in Slovenia is still propelled by exports, which are however rising at a significantly lower pace than in the first six months of the year. At an annual level exports grew by 5.6% in the third quarter.

Imports however grew even slower, by 3.7%, which resulted in a positive external trade balance of 1.3 percentage points.

Domestic spending showed no signs of recovery in the third quarter, contracting by 1.9% over the third quarter in 2010.

Continuing a marked contraction, although at a slightly slower pace than in the previous quarters, was the construction sector, which shrank by 19.7% on the same quarter of the previous year.

The Institute of Macroeconomic Analysis and Development (IMAD), a government think tank, commented that the drop was in line with short-term indicators and that "uncertainty in the international environment is increasingly reflected in the export segment of the economy", a key motor of growth.

The slowdown in exports was reflected the most in manufacturing, where added value fell by 0.1% in the third quarter year-on-year after having grown by 5.1% in the second quarter, IMAD said.

The institute moreover pointed to domestic spending remaining below last last year's level in the last two quarters, with gross fixed capital formation dropping by 13% in the third quarter over the same period last year.

Also down year-on-year were household spending, by 0.2%, and government spending, by 0.5%.

IMAD added that the latest Eurostat data put EU-wide GDP growth in the third quarter over the previos quarter at 0.2%, with only three countries performing worse than Slovenia.


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