Driven by external demand, Slovenia's economy expanded at an annual rate of 0.7% in the first quarter of 2023, after growing by 0.2% in the previous quarter, fresh data from the Statistics Office shows.

Final consumption expenditure was slightly lower than in the last quarter of last year, but exports increased while imports fell, and the construction industry drove growth in the value added.

Exports increased by 1.9% year-on-year as imports fell by 3.8%. External trade balance on services was positive for the fourth consecutive quarter. It the case of goods it was positive for the first time in two years.

The external trade balance had the highest positive contribution to GDP growth the past decade, reaching 5.1 percentage points. The terms of trade also contributed to better external trade balance, being positive for the first time since the last quarter of 2020.

Meanwhile, domestic expenditure decreased by 4.4% year-on-year, a development strongly affected by a decline in inventories.

Household consumption expenditure was up by 2.1%, which is somewhat less than in the previous quarter (2.6%), and gross fixed capital formation rose by 6.5%, which is more than in the quarter before (5.9%).

Total value added was up by 1.1% compared to the first quarter of 2022, mostly due to construction. The biggest negative impact on value added was recorded in trade, food service activities and transport.

Total employment increased by 1.1% year on year to 1,080,200 people. Most new jobs were created in construction and manufacturing.

Seasonally adjusted data, which are used for EU comparisons, also show a 0.7% economic growth in the first quarter year-on-year.

According to fresh estimate released by Eurostat on 16 May, GDP grew by 0.1% in the euro area and by 0.2% in the EU in the first quarter of 2023.

In its latest economic outlook, the European Commission forecasts for Slovenia's GDP to increase to 1.2% this year and 2.2% in 2024, both of which are a 0.2-percentage-point upgrade from the previous forecast.

The EBRD has also upgraded its forecast for Slovenia's economic growth for this year to 1.5%, up by 0.5 points from the February forecast. The bank kept the 2024 forecast at 2.3%.