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The available indicators for the euro area point to modest quarter-on-quarter economic growth in the first quarter after stagnating in the fourth quarter of last year; in its April outlook, the International Monetary Fund (IMF) forecasts growth of 0.8% for the euro area this year, followed by a modest recovery next year (to 1.4%). Amid high inflation, tight financing conditions and high uncertainty, euro area GDP was unchanged in the fourth quarter of last year compared to the third quarter (1.8% year-on-year growth). At the beginning of the year, industrial production and construction activity increased in current terms, while turnover in retail trade remained similar to that in the previous quarter. Confidence indicators improved in the first three months as a whole compared to the previous quarter. 

Short-term indicators of economic activity for Slovenia point to weak growth at the beginning of the year in the export-oriented part of the economy and in most services, except in retail trade, and to further strengthening in construction. After a deterioration in the export-oriented part of the economy towards the end of last year and a decline in export market share in the EU market, trade in goods picked up in February, though remaining lower than a year ago. Manufacturing output increased on average in January and February compared to the fourth quarter of last year. It remained roughly unchanged year-on-year – it was higher in the two high-technology industries (the manufacture of ICT equipment and, in our assessment, the pharmaceutical industry), which are less affected by the slowdown in external demand growth and the energy crisis. Output was lower in all other groups, especially in more energy-intensive industries. Growth of trade in services, driven since spring last year mainly by the post-COVID-19 recovery in tourism, continued in January and remained high year-on-year. Real income in services rose in January after falling in the previous months and was significantly higher year-on-year. High growth continued in accommodation and food service activities and in professional and technical activities. Real turnover in retail trade in January and February was lower on average than in the previous quarter and also year-on-year. At the beginning of the year, household expenditure on food, non-food products and overnight stays in Slovenia decreased year-on-year, while it increased on cars and tourist services abroad. Construction activity continued to rise in February. Compared to previous years, construction of residential buildings stood out in terms of activity. The economic sentiment improved in the first quarter as a whole compared to the fourth quarter of last year, but was still below the level of the same period in 2022. 

Growth in the number of persons in employment continued at the beginning of the year with a strong influx of foreign workers, as did the decline in the number of unemployed. With the number of persons in employment at a record high, year-on-year growth in January was 1.9%, similar as in the previous months. Due to labour shortages in most activities, the employment of foreign workers has been increasingly contributing to overall growth in the number of persons in employment – almost 80% in January. According to seasonally adjusted data, the number of registered unemployed continued to decline in March and was down 16.9% year-on-year. The number of long-term unemployed was almost a third lower than a year ago, given the severe labour shortage and high demand for labour. The average gross wage was 1.3% higher year-on-year in real terms in January, mainly due to the increase in the minimum wage at the beginning of the year. In the private sector, the average gross wage increased by 2.2% year-on-year in real terms, while in the public sector it remained unchanged year-on-year.

In March, consumer prices remained unchanged from the previous month, while year-on-year inflation increased, as expected (to 10.5%). Much of this increase was due to the lower base from last year, when the government significantly reduced electricity prices by abolishing certain levies and charges. Consequently, prices this March were almost 50% higher year-on-year. The main contribution to inflation came from the prices of food and non-alcoholic beverages, which were almost one-fifth higher year-on-year, and the contribution of price growth in non-energy industrial goods and services also remained high. Core inflation – price growth excluding the impact of energy, food and non-alcoholic beverages – remains around 8%. 

In the first two months of this year, the consolidated general government budgetary accounts showed a surplus of EUR 119.8 million, similar to the same period last year. In the first two months of the year, revenue fell year-on-year (by 0.5%). Receipts from the EU budget were lower, after a sharp rise last year related to the disbursement of part of the advance payment from the Recovery and Resilience Facility, as was some other non-tax revenue. At the same time, tax revenue growth, which had surged in the same period last year due to the post-pandemic recovery, has slowed significantly, and the slowdown was partly due to a decrease in the tax burden. Revenue growth was mainly driven by the growth in social contributions in the context of rising employment and accelerated wage growth. Expenditure was also slightly lower than in the same period last year (by 0.5%). This was mainly due to lower expenditure on reserves (receipts from the Recovery and Resilience Facility) and payments to the EU budget, but also to lower transfers related to the lifting of measures to mitigate the consequences of COVID-19. On the expenditure side, wages and other labour costs increased. The main factors behind the increase were the agreement on public sector wage increase, interest rates and investment.