In nominal terms, Slovenia's GDP amounted to EUR 35.47m (EUR 17,244 per inhabitant) or 2% less than in 2011, according to first estimates.

In the fourth quarter of 2012, the GDP shrank by 3% at the annual level in real terms, while in the third quarter, it contracted by 3.3%. In the second quarter, economic output shed 3.2% after a 0.1% increase in the first three months.

"The economic activity is thus decreasing at roughly the same rates for the third quarter in a row," the Statistics Office said in a press release, attributing the trend to weaker domestic consumption (-7.8%) and lower government spending (-1.3%) in the final quarter.

Household spending, which accounts for nearly 50% of GDP, also saw a considerable drop in the last quarter - 5.8%. "Up until now, the crisis has failed to cut into household spending, but now it appears that the current wave of crisis is taking trouble also to this area," Karmen Hren of the Statistics Office said.

Gross capital formation, a gauge of investments, continues to decrease and was down 22.4% compared to the fourth quarter of 2011. Gross fixed capital formation in buildings and structures fell by 18.5% and in machinery and equipment by 4.5%, according to the Statistics Office.

Decline in domestic demand is also reflected in trade, with imports of goods and services down 6.6% at the annual level. Exports of goods and services meanwhile remained flat.

"External demand thus remains the only element that prevents an even greater reduction in the economic activity," the statisticians said.

In the fourth quarter of 2012, total value added decreased by 2.8% at the annual level. In manufacturing it decreased by 0.8%, in trade, transport and hotels by 3.6% and in public administration, education and health by 1.2%.

The Institute of Macroeconomic Analysis and Development (IMAD), the government economic think-tank, attributed the 2.3% drop in GDP to stagnating exports and lower domestic spending.

"Poor economic results in the past years are like in most EU countries a reflection of accumulated structural weakness and low competitiveness," IMAD said, stressing it did not expect a recovery this year.

"A steep decline in economic activity, which has exceeded EU's average in the period of the crisis, is in addition to cyclical factors above all a reflection of structural weaknesses of the Slovenian economy, which has seen insufficient measures to boost competitiveness," IMAD Boss Boštjan Vasle said.

The average GDP in the eurozone, adjusted for season and working days, decreased 0.6% quarter-on-quarter, while in Slovenia, the decline was 1% and was among the highest in the group.

"Slovenia thus remains in the group of EU countries which lag most behind the average level of economic activity from 2008," the think-tank said.

Exports, the main driver of Slovenia's modest economic growth over the past two years, added only 0.3% in 2012, while government spending decreased for the second year in a row due to austerity measures. An even bigger decrease was recorded in household spending, which in 2012 decreased for the first time since the onset of the crisis, IMAD said.

"This was caused primarily by a reduction of wages in real terms and a further decline in employment. Due to measures to curb public spending and new eligibility criteria, social transfers also decreased while a general sense of uncertainty impacted on consumer confidence," Vasle said.