While the Slovenian economy has now failed to register growth for seven consecutive quarters, the pace of contraction dropped significantly in the last quarter.

This was helped by a marked easing in the decline of domestic spending, which fell by 3.4% year-on-year, less than half as much as in the previous quarter, data from the Statistics Office show.

The smaller drop in spending came on the back of a significant slowing of the contraction in fixed capital formation, which shrank by 8.1%, down from the 21.4% drop a quarter earlier.

Trade continued to be an engine of expansion, as its positive effects on GDP stood at 1.5%.

In the first half of 2013, GDP fell by 3.2% compared to the same period a year ago.

Adjusted for working days and season, GDP fell by 0.3% over the previous quarter and 2.2% over the second quarter of 2012.

Consumption remains the main obstacle to growth, with state spending again seeing the biggest drop, at 3.1%. Domestic spending fell 2%.

Anže Podnar of the Statistics Office told the press that state spending has decreased by more than 7% since the beginning of 2011. "The state is saving in all areas, primarily in labour and material costs."

Domestic spending on durable products increased by 2.9%, while spending on other products decreased by 2.5%.

According to Podnar, one of the reasons for the increase in spending on durable products could be households opting for major purchases, primarily of cars and furniture, because of the announced VAT increase.

The drop in gross fixed capital formation remained more or less steady at 3%, but the contraction in inventory slowed to 0.9% from 3.7% in the previous quarter.

Exports grew by 2%, up from 1.7% in the previous quarter, but the effects of the trade balance were diminished by a growth in imports.

Podnar said that the trade conditions were favourable, as export prices grew faster than import prices (index 101.8), for the first time after 2009.

This had a positive effect on the economy, as added value increased by about EUR 115m while the volume of economic activity remained the same, according to Podnar.

Information and communication remained the sole sector showing growth in value added in the second quarter, expanding by 3% year-on-year. The real estate and agriculture sectors remained unchanged.

While still high at 11.1%, the contraction of the construction sector slowed significantly from 17.2% in the first quarter.

Meanwhile, the financial services saw contraction pick up, as value added in the sector declined by 7.1%, compared to 4.9% the quarter before.

Manufacturing shrank by 2.1% (3% in the first quarter), while the public sector contracted by 2% (1.5% in the first quarter).

The Statistics Office also published revised data for GDP in 2012, saying that Slovenia's GDP last year decreased by 2.5%, which is 0.2 percentage points down compared to preliminary data. The revised estimate of GDP for 2012 stands at EUR 35.3bn.