The Slovenia Times

Analysts Predict 0.6% Contraction for Slovenia

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Unicredit's latest study, presented on the sidelines of the regional Euromoney conference in Vienna on Wednesday, points to a variety of factors for the fall in Slovenia's GDP, including political uncertainty.

The analysis highlights Slovenia's structural weakness, macroeconomic imbalances related to the budget deficit, vulnerable financial position compared to the rest of the world, political uncertainty which is causing a delay in the adoption of reforms, and the country's dependence on exports to western Europe.

Presenting the study, Fabio Mucci, head of CEE Banking Analysis at Unicredit, said that apart from Slovenia, the only other economy in the region to see a contraction this year would be Croatia, at a rate of 0.5%.

Hungary is projected to record zero growth, while the other economies in the region are expected to grow this year, with Kazakhstan at the forefront with the annual growth of 6%.

Future economic growth is likely to be structurally lower and the differences in growth rates within the region will probably be much higher than in the past, said Gianni Franco Papa, who is responsible for the region at Unicredit.

Central and Eastern Europe are to remain a region of two halves with the bigger economies expected to continue to grow at almost full speed and the rest suffering due to their structural weaknesses and their strong dependence on the results of Europe's periphery, Papa said.

After Slovenia trailed the list of countries in the region with a 0.7% contraction in crediting in the first eleven months of last year, Unicredit analysts project a 1.5% growth for this year. In 2010, the country saw a 3.3% growth in approved loans.

The region's banking sector saw an improvement in various parameters last year and with the exception of Kazakhstan all countries registered a fall in provisions. Their percentage was halved compared to 2010.
 

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