The Slovenia Times

Slovenia's Economy Contracted 3.3%


Slovenia is thus formally in recession having posted two consecutive quarters of decline, its second recession in three years as domestic demand continues to weigh down on growth.

"The situation in the Slovenian economy remains bad," Karmen Hren, the head of macroeconomic statistics, told the press in Ljubljana, highlighting the contracting domestic demand as well as lower exports.

Domestic expenditure plunged 6.6% over the year before, with households as well as the general government trimming spending by 3% as the government continued to consolidate public finances.

Gross capital formation, a gauge of investments, plummeted 20.4%, the biggest decline since the early stages of the economic crisis in 2009.

"Looking at construction investment, it has dropped by over 50% compared to [pre-crisis year] 2008," Hren said, noting that it was now at its lowest level since records began in 1995.

The declining domestic demand has been partially offset by external demand, though that has been falling as well. Exports are down 0.7% and imports fell 5.1%, making for a net contribution of external trade balance to GDP of 3.1 percentage points.

The Institute of Macroeconomic Analysis and Development (IMAD), a government think-tank, attributes the decline in exports to "weakness in Slovenia's main trading partners".

The statisticians have also recorded value added dropping across the board, with declines ranging from 10.4% in construction to 4.5% in IT and financial services to 0.6% in manufacturing, making for an overall decline of 3.1%.

The Statistics Office projects that if GDP continues to decline at the current pace, the end-year contraction will have reached 2.2%, but if the situation declines it could climb to 2.6%.

The Chamber of Commerce and Industry responded to the data by labelling it expected, saying that another quarterly drop like that could quickly mean a 2.5% yearly contraction.

"We have for a while been pointing to the serious consequences for the GDP of the collapse on the investment market or in construction and the related industrial and service activities. We are moreover highlighting the deteriorating situation on export markers, with both things being related to the drop in purchasing power," the GZS wrote.


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