News

In the final quarter of last year economic activity in the euro area continued to grow, and the European Commission raised slightly its forecasts for this year and 2015. According to Eurostat’s flash estimate, economic growth rose by 0.3% in the last quarter of 2013 (seasonally adjusted) and was 0.5% higher than in the same period of 2012. Economic growth in Slovenia's main trading partners continued, being higher than predicted by the Commission particularly in Spain and Portugal. In its winter forecast the Commission expects somewhat higher (by 0.1 percentage points) GDP growth in the euro area this year and in 2015 (1.2 and 1.8%, respectively) than projected in the autumn. In addition to net exports, it will be based on domestic demand and remains associated with similar risks as in the autumn (insufficient reforms and their slow implementation; financial fragmentation; low inflation; slower growth in emerging market economies).

Economic activity in 2013 overall was down 1.1% on the previous year despite fourth-quarter growth. The latest SURS figures show that economic activity, which had ceased to decline quarter-on-quarter at the beginning of 2013, strengthened substantially in the final quarter and was up year-on-year (2.1%) for the first time since the third quarter of 2011. This was mainly a result of gross fixed capital formation, which was up in year-on-year terms for the first time since the beginning of the crisis, while private consumption remained unchanged year-on-year. The contribution of net exports was negative amid slightly lower growth in exports and higher growth in imports. Government consumption was down again year-on-year. Value added in the final quarter was higher or approximately the same as in the same period of 2012 in most sectors. It rose most in construction, while falling again in financial and insurance services.

The labour market situation deteriorated further at the end of last and the beginning of this year. Having stagnated until November, employment fell slightly in December (-0.1%, seasonally adjusted). In 2013 overall the number of employed persons was down 2.0% on the previous year mainly due to a decline in the construction and manufacturing sectors. After the sharp increases in December and January, registered unemployment grew further in February (up 0.5%, seasonally adjusted), with 129,764 persons registered as unemployed at the end of the month, 5,698 more than in the previous February. The increase was mainly a result of a larger inflow into unemployment, in particular due to the expiration of fixed-term contracts, but also as a result of a larger number of first-time jobseekers. The average gross earnings per employee rose in the final quarter of 2013 amid the otherwise lowest extraordinary year-end payments in the last nine years. In 2013 overall the average gross earnings per employee increased year-on-year in the private sector (0.6%), while being down in the public sector (-1.3%) owing to a decline in the general government (-2.5%) as a consequence of a full-year effect of the ZUJF and a further reduction in public servants’ earnings.

Consumer prices remained almost unchanged in February, similar to those in February 2013. Modest 0.1% monthly growth was a result of lower prices of liquid fuels and vegetables. Year-on-year growth eased markedly in February (by 0.7 percentage points to 0.1%), particularly on account of lower prices of liquid fuels and durable and semi-durable goods, and continues to reflect a long period of shrinking economic activity and deteriorating labour market conditions.

The situation in the Slovenian banking sector stopped deteriorating at the beginning of this year. In January the stock of household and government deposits rose. Household loans declined half less than in December last year. Corporate and NFI loans were up for the first time in two years, however only due to the borrowing by NFIs. In December enterprises and NFIs deleveraged abroad for the second consecutive month. They were mainly repaying long-term loans. Bank deleveraging abroad slowed further at the end of last year, so that in 2013 overall banks repaid EUR 2.1 bn, which is less than in the previous two years. With EUR 3.2 bn of bad claims transferred to the DUTB, the volume of bad claims shrank in December. The total decline was nevertheless fairly modest (by EUR 400 m to EUR 8.2 bn) due to a concurrent inflow of B-rated claims impaired due to a different valuation of the collateral. In 2013 as a whole the volume of bad claims rose by EUR 1.5 bn, which is the highest figure to date. The vigorous creation of impairments and provisions seen at the beginning of the banking system stabilisation at the end of 2013 eased strongly in January.

As a consequence of lower revenue and higher expenditure, the general government deficit rose by EUR 431 m to EUR 1.56 bn in 2013. Lower revenue (-1.8%) was a result of lower revenues from taxes, which were down 3.6% on 2012, despite higher revenue from VAT (by 4.3%) due to the increase in VAT rates in June 2013 and measures to reduce the grey economy. Non-tax revenues were up 8.0% mainly due to EU funds and July’s increase in dividends. Higher expenditure (1.0%) mainly reflected higher interest payments (up 29.7%) and higher expenditure on investment (up 12.7%).