Central bank says current economic impact of epidemic is small

Ljubljana – The central bank assessed in its latest publication, issued on Tuesday, that the aggravated epidemiological situation brought by an increased number of coronavirus infections with the Omicron variant has had a relatively small impact on the economy.

After Slovenia reached the pre-coronavirus crisis level of GDP in the third quarter of last year, the increased economic activity has slowed down somewhat, Banka Slovenije said in its latest bulletin.

While the country’s investment activity is growing stronger, economic growth is notably driven by domestic consumption, which is much stronger than the eurozone on average, the publication adds.

Despite the current situation being favourable, the central bank assesses that some macroeconomic risks remain high – including the risk of increased absenteeism as the daily number of coronavirus cases are breaking records.

Other notable risks are the high energy costs and higher inflation, which has already started reducing income growth in real terms.

Shortage of skilled workforce is also becoming a major challenge for companies, which Banka Slovenije has estimated is a limiting factor for around 30% of companies in Slovenia.

The central bank noted that due to the rapid decline in unemployment and the consequent staff shortages, companies resort to employing foreign nationals. Last autumn, these accounted for half of the annual growth in the number of employed people.