News
Economic growth is slowing, in line with expectations
In the third quarter economic growth slowed, which was expected in light of the indicators published in the last few weeks. The slowdown was mainly due to a decline in exports and investment, while final consumption remained at the same level as in the previous quarters. The slowdown in economic growth is not yet reflected in the labour market, where results are expected to deteriorate with a lag of a few quarters.
According to the data released today by the Statistical Office of the Republic of Slovenia, economic growth totalled 3.8% in the third quarter of 2008, which is much less than in the first half of the year, when economic growth was at 5.5%. Boštjan Vasle, Director of the Institute of Macroeconomic Analysis and Development, explained that “the expected slowdown in economic growth is largely a result of diminished export and investment activity, which was the main driver of economic growth in the previous quarters.” Consistent with the notable slowdown in economic growth in the international environment, the growth of merchandise exports significantly decelerated as well. The growth of gross fixed capital formation also moderated, from 10.2% in the second quarter to 3.5% in the third quarter. The slowdown was seen in all investment activities; residential construction even slightly declined. The growth of final domestic consumption remained at the modest level of the previous quarters. With regard to activities, a value added drop was recorded in manufacturing (-0.5%), which is the first negative growth since the first quarter of 1999. Construction and financial intermediation remain the activities with highest value added; value added growth in other market services is gradually slowing (and is even declining in hotels and restaurants).
The slowdown in economic activity has not yet had a significant impact on the labour market, but past experience indicates that a decline in growth impacts the labour market with a lag of several quarters; the main indicators are thus expected to deteriorate in the first half of next year.
Mr. Vasle also added that “the available data on economic activity over the past few months and the expectations for the coming months, as well as the outlook for the international environment, indicate the need for a revision of the autumn forecast of economic trends. We expect to communicate the results to the government and the general public by the end of the year.”