The Slovenia Times

Economists Cautious in Predictions of the End of Recession


Former economic development minister Jože P. Damijan was pleasantly surprised by the annual contraction only standing at 1.1% of GDP following 2.1% growth in the final quarter, but also hopes that the result did not involve a bit of creative accounting.

"I did not expect an economic turnaround before the middle of this year, therefore this faster exit from the recession is definitely welcome," Damijan said, while expressing surprise over gross investment increasing by almost 23% in the final quarter of 2013.

At the same the construction expanded substantially. "I don't know what kind of major construction projects there were in the final quarter," he said.

He hopes that the statistics were not sexed up and do not rely on last-minute use of EU funding that will still need to be justified.

France Križanič, finance minister in the 2008-2011 SocDem led government, on the other hand argued that the economic decline in 2012 and 2013 had been the product of misguided domestic economic policies.

He noted that the GDP had contracted despite export growth and sees the Slovenian central bank's restrictive credit policy as a key reason for the recession.

The second reason, according to Križanič, were the austerity measures of the 2012 Democrats (SDS)-led government.

He feels Slovenia has potential for growth, provided that a change is secured in the credit policy of banks that were bailed out by the state, seeing a possible solution in another loan guarantees scheme.

Križanič however also hopes that the "mistakes in the 2012-2013 economic policy were not intentional" and will not be restored.

Meanwhile, the Chamber of Industry and Commerce (GZS) said that the growth recorded in the last quarter is not yet strong enough to curb unemployment, for which an expansion of above 1.5% would be necessary.

The GZS added that especially the trend in the labour market remains unfavourable and that the growth can be attributed above all to successful phasing of EU funds for the construction of municipal infrastructure.


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