The Slovenia Times

Slovenia's economy grew at an annual rate of 9.8% in first quarter


Ljubljana - Slovenia's economy expanded at an annual nominal rate of 9.8% in the first quarter of this year driven by household spending and capital expenditure. The seasonally adjusted rate was 9.6%. At the quarterly level GDP was up by 0.8%, a significant slowdown compared to the 5.3% recorded in the previous quarter, the Statistics Office said on Monday.

Domestic consumption increased by 16.6% year-on-year with household expenditure up by 20% as the main driver of growth. Gross fixed capital formation increased by 12.7%. Changes of inventories had a positive impact on GDP growth as well.

External trade, for years the main engine of growth, has exerted a negative impact on GDP since the start of the pandemic due to surging imports and the trend remained unchanged in the first quarter.

With imports up by 15.7% and exports increasing by only 7.7% year-on-year, the contribution of external trade balance to GDP growth was negative again, shaving 5.6 percentage points off GDP growth.

Total value added increased by 9.3% over the first quarter of 2021. Trade, transport, and accommodation and food service activities grew by 21.8% and contributed the most to the structure of total value added. Construction increased by 16.7%.

Services continued to grow strong in the first quarter, while manufacturing growth slowed for the third consecutive quarter but remained positive, at 3.9%. Net taxes contributed significantly to GDP growth as they grew by 13.2% over the same period last year.

The payrolls total rose by 3.3% to 1,073,000 persons. The bulk of the new jobs were created in accommodation and food service activities, manufacturing, and construction.

IMAD, the government's macroeconomic forecaster, noted that the annual growth was from a very low base and said the figures were line with its spring forecast, released in March.

"But uncertainty and downside risks connected with geopolitical circumstances and energy supplies have been exacerbated since then," IMAD director Maja Bednaš said.

Banka Slovenije, the country's central bank, described the quarterly slowdown as expected, while adding that the rate of growth was still 0.6 percentage points above the EU average.


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