AmCham business breakfast discusses post-epidemic recovery

Ljubljana – A virtual AmCham Slovenia business breakfast on Wednesday discussed economic recovery in 2021 to hear that the Covid-19 crisis has hit the Slovenian economy hard. It has nevertheless been kept alive by state aid and is waiting to see the light at the end of the tunnel, which could happen in the spring.

It is Economy Minister Zdravko Počivalšek who believes that the situation could improve with the spring. However, vaccination against Covid-19 alone is not enough to end the health crisis, as protective measures need to be respected too.

The minister noted that the economy had been functioning more or less hampered for almost a year. Certain industries are closed and additional measures are required to re-start the economy to the greatest possible extent.

Počivalšek said that around EUR 3 billion had been spent out of the EUR 6 billion in stimulus packages that had been adopted so far, but he expects that much of it will be used eventually as the “things are still being implemented and are moving.”

Remaining largely untapped is the EUR 2 billion loan guarantee scheme for companies from last spring, which according to him shows that companies had been in a relatively good shape at the time. “But I think that liquidity will now be the main topic for me.”

Blaž Brodnjak, the chairman of the NLB bank, said that the situation in the banking sector was considerably better than one could have hoped for last spring. “Banks have an adequate amount of capital, they are profitable and exceptionally liquid despite the crisis.”

He added that banks would support economic development, but the problem is that uncertainty forces companies to postpone investments and increase deposits. “We have a historically high volume of loans for financing of working capital.”

Certain indicators show that Slovenia, for the time being, has dealt with the economic crisis successfully in comparison to other EU members, and Nevenka Kržan of the consultancy KPMG Slovenija pointed to the favourable trends on the labour market.

The drop of Slovenia’s GDP in 2020 has been estimated at 7.6%, and one would expect a higher unemployment rate than 5.4% at the end of last year, she said, noting that a poorer result had been prevented by state aid. “We need to be aware that 10% of employees were furloughed in December.”

Počivalšek noted that the essence of all state measures was to preserve every possible job and help companies survive. He drew parallels with the financial crisis from more than a decade ago, saying that many companies would not have gone bust had the state responded faster.

As Joe Biden is set to be inaugurated as the 46th president of the United States today, the meeting also discussed the future economic relations between Slovenia and the US. A large majority of the participants said they expected economic cooperation to improve under the new administration.

But Počivalšek doubts that. “The new administration will have no significant impact on the cooperation itself,” he said, adding that he had been striving for more trade with the US ever since he became minister in 2014.

“We may be satisfied with cooperation in finance, but not with trade,” he said, while US Embassy Deputy Chief of Mission Susan K. Falatko noted that Biden put great emphasis on trans-Atlantic relations.

Falatko said that the relations between Slovenia and the US had grown stronger in recent years, expressing the belief that they would certainly remain strong.

The participants agreed that many things will be different after the health crisis, as more emphasis will be put on green, sustainable and digital content. EU funds are expected to contribute greatly to implementation of such projects.