The short-term economic indicators for Slovenia point to a continuation of gradual recovery in the first two months of the year. They have largely returned to the level of a year ago, with the exception of construction, where activity nevertheless remains high. Economic sentiment improved in the first quarter compared to the previous quarter, while it remained weaker year-on-year. Manufacturing output continued to rise in February. Since the beginning of the year, manufacturing output has risen in all industry groups by technology intensity. In the first two months, it was on average also higher year-on-year. In February, real exports and imports of goods continued to fall month-on-month. However, following a decline last year, exports were higher in the first two months, while imports remained lower than in the same period last year. The value of construction put in place fell in January from an otherwise high level. This was the first time in two years that it was also down year-on-year. Year-on-year growth in services trade slowed considerably last year and in January was at the same level as a year ago. Trade in services, especially transport services, continues to be significantly affected by the subdued economic growth in Slovenia’s main trading partners. Imports and exports of most other main groups of services were higher year-on-year. In January, total real turnover in market services remained at the level of December 2023, while it was higher year-on-year. Real turnover in most trade sectors continued to rise in January; only in wholesale trade was it lower year-on-year. Economic sentiment improved on average in the first quarter compared to the previous quarter, but it remained weaker year-on-year, with the exception of consumer confidence.

Electricity consumption in March was 8% lower year-on-year. On a high base of last year, the year-on-year decline was, in our view, due to both lower industrial and lower household consumption. The latter was also related to the limited operation of ski resorts and the nearby tourist accommodation, which are part of household consumption. Among Slovenia’s main trading partners, lower consumption compared to March 2023 was recorded by Austria (-5%), Croatia (-2%) and Germany (-2%), while consumption was higher year-on-year in Italy (1%) and France (3%).

In February, electricity consumption in the distribution network was lower than a year ago. This was mainly due to the year-on-year lower household consumption (-4.2%), which, in addition to the different timing of the winter holidays compared to the previous year, could also be due to the lower occupancy of tourist accommodation facilities at the ski resorts, which operated only to a limited extent due to the high temperatures. However, industrial and small business consumption in February were similar to a year ago.

The nominal value of fiscally verified invoices was 3% higher year-on-year in March. With two working days less than in March 2023, year-on-year growth in total turnover was the lowest since the beginning of the year. In trade, which accounted for almost 80% of the total value of fiscally verified invoices, turnover growth was lower than in the previous two months (at 2%, against 4% in January and 8% in February). It slowed in all three main trade segments, while year-on-year turnover growth in retail trade remained relatively strong (6%), also influenced by the timing of the Easter holidays (and purchases before the holidays), which were a week earlier this year than last. Turnover in the sale of motor vehicles was similar as last March, while turnover in wholesale trade was 8% lower year-on-year. Year-on-year turnover growth remained high in accommodation and food service activities and in certain creative, arts, entertainment and sports services and betting and gambling (total growth in accommodation and food service activities and other service activities was 11%). 
On average, total turnover in the first quarter rose by 5% year-on-year in nominal terms.

In February, real exports and imports of goods continued to decline month-on-month; exports were higher year-on-year, while imports remained lower. As in previous months, the external trade movements were primarily influenced by the slow economic recovery in Slovenia’s main EU trading partners. Real exports fell by 0.6% in February, due to lower exports of most main product groups, with the exception of motor vehicles exports, the value of which rose for the third month in a row and approached the 2019 levels (seasonally adjusted) after several years of strong fluctuations. Real imports fell by 0.5%, with imports of intermediate and consumer goods declining, particularly from non-EU countries (seasonally adjusted). In the first two months, exports (to EU and non-EU countries) were 2.4% higher compared to the same period last year, while the year-on-year decline in imports narrowed (to -1.8%). Sentiment in export-oriented activities improved slightly in March, but export orders remained at a very low level.

In January, trade in services remained at the same level as at the end of 2023 (seasonally adjusted). Exports of services fell, mainly due to a decline in exports of transport and tourism-related services. Exports of administrative and support service activities rose slightly. Among main import groups, imports of tourism-related services and other business services increased, while imports of transportation services and other business services decreased. Year-on-year growth in services trade, which had slowed considerably last year, reached the year-ago level in January. In particular, the subdued economic growth in Slovenia’s main trading partners continues to weigh heavily on this development. Trade in transport services fell markedly year-on-year (exports by 14.2% and imports by 13.1%), while trade in most other important service groups increased year-on-year.

Manufacturing output continued to rise in February and was higher year-on-year. Since the beginning of the year, manufacturing output has risen in all industry groups by technology intensity. In the first two months, it was also higher year-on-year (by 0.7%). Activity in the energy-intensive chemical industry and the manufacture of other non-metallic mineral products and some less technologically demanding industries (repair and installation of machinery and equipment, manufacture of rubber products, wood-processing and furniture industries, manufacture of leather and textiles) remained lower than a year ago. However, activity in the energy-intensive manufacture of paper and basic metals was higher year-on-year in the first two months.
According to data on business trends, manufacturing companies’ expectations regarding future production have improved since the beginning of the year. However, inventory indicators remain lower than a year ago. In particular, the level of (total and export) orders was low at the end of the first quarter. Companies continue to cite insufficient foreign and domestic demand as the main limiting factor (one-third of respondents).

According to data on the value of construction work put in place, construction activity fell in January and was also down year-on-year. After high growth in the value of construction work put in place at the beginning of last year, activity declined gradually amid monthly fluctuations. In January, the value of work put in place was 7% lower year-on-year, which represents the first annual decline in the last two years. 
However, some other data point to growth in construction activity. According to VAT data, for example, the activity of construction companies in January was 8% higher than last year. Compared with data on the value of construction put in place, the difference shown in the growth of this activity was thus 15 p.p. 

In most trade sectors, real turnover rose at the beginning of the year and was higher year-on-year in January and, according to preliminary data, also in February. Following high growth last year, turnover in the sales of motor vehicles remained largely unchanged in January and was 14% higher year-on-year. Following growth in the fourth quarter of last year, turnover in retail sales of non-food products, which was up 1% year-on-year, and in wholesale trade, which remained down year-on-year (-2%), continued to strengthen. After a modest increase in the second half of last year, turnover in retail sales of food, beverages and tobacco, which was 2% higher year-on-year, fell slightly in January. According to preliminary SURS data, turnover in February was again higher year-on-year in the sales of motor vehicles and retail sales of food, while turnover in retail sales of non-food products was similar to February 2023.

Total real turnover remained at the level of December 2023, while it was 6.3% higher year-on-year in real terms. After two months of growth, turnover fell in administrative and support service activities, but with continued growth in employment services. Turnover also declined in accommodation and food service activities, mainly due to a fall in turnover in the accommodation sector. A decline was recorded also in transportation and storage, this time mainly in warehousing and storage. After a decline in December, turnover growth was the highest in information and communication. The strong growth came mainly from computer services, where turnover increased primarily on the domestic market. Turnover growth continued in professional and technical activities, with robust growth in architectural and engineering services. Total turnover in market services rose by 6.3% year-on-year in real terms in January, which can be attributed to growth in all market services with the exception of real estate activities.

The available data indicate that household consumption increased year-on-year at the beginning of the year. Sales of new passenger cars used by natural persons rose by 14% year-on-year in January, following a sharp year-on-year increase at the end of last year. Spending on tourism services at home and abroad was also higher year-on-year. Spending on non-food products and food, beverages and tobacco products was also higher on average in January and February than in the same period last year. The year-on-year growth in household consumption in the first quarter is also evident from the growth in the nominal value of fiscally verified invoices (5%), which, amid lower price growth than in the previous quarters, also increased significantly in real terms. 

In March, the economic sentiment indicator fell again month-on-month and also year-on-year. Compared to February, confidence fell in service and manufacturing activities and in retail trade. It was only higher in construction, while it remained roughly unchanged among consumers. Compared to March 2023, confidence was down in all activities and, with price developments easing, higher only among consumers, where it is still significantly more below the long-term average than in the years before the epidemic. 

Amid a further decline in the volume of sales, growth in dwelling prices halved in 2023 as a whole. Following average growth of 14.8% in 2022 and 11.5% in 2021, dwelling prices were 7.1% higher year-on-year last year. Prices of existing dwellings, where the number of transactions fell below 10,000 for the first time since 2014 (and was almost one-quarter lower year-on-year), were 7.3% higher year-on-year. Prices of newly built dwellings were also higher (by 5.4%), but these dwellings accounted for only 3% of all transactions. They were 43.9% higher than in 2008, with prices of existing dwellings rising by 51.3% (by 41.1% in Ljubljana and by 71.8% elsewhere) and prices of newly built dwellings by 18.2%. 

In the first quarter, the financial situation of households remained largely unchanged both on the previous quarter and year-on-year. Compared to the previous quarter, the share of households from the lowest-income quartile facing financial distress decreased by 1.9 p.p. (by 1.6 p.p. year-on-year). According to our estimate, this was partly due to the increase in the minimum wage in January, regular indexation of pensions, continued gradual slowdown in inflation and developments on the labour market (higher employment and wages). The financial situation of households from the second income quartile improved (by 2.7 p.p.; by 1.2 p.p. year-on-year). Despite the improvement, the financial situation of households in the two lowest income quartiles was slightly worse on average in Q1 than in 2019. Households facing financial distress continued to cover their financial needs to a greater extent by drawing on savings.

The number of persons in employment continued to rise year-on-year in January. Growth was higher (1.3%) than in the final months of 2023 (still 0.6% in December), when year-on-year growth slowed, and was mainly due to a change in the definition of persons in employment. This is also the reason why the highest growth was recorded in construction, which is facing a major labour shortage and saw the largest increase in the number of persons in employment compared to the same period in 2019. The number declined year-on-year in administrative and support service activities. The year-on-year increase in the number of persons in employment was due to a higher number of employed foreign nationals, while the number of employed Slovenian citizens fell. The share of foreign citizens among all persons in employment was 15.3% in January, 1.3 p.p. higher than a year earlier. Activities with the largest shares were construction (49%), transportation and storage (33%), and administrative and support service activities (28%). 

According to the seasonally adjusted data, the monthly decline in the number of registered unemployed in March (0.9%) was similar to February. According to original data, 46,877 people were unemployed at the end of March, 6.9% less than a year ago. Amid labour shortages, the number of long-term unemployed (more than one year) fell by 14.9% year-on-year at the end of March, while the number of unemployed over 50 fell by 9%.

In February, the number of financial social assistance (FSA) beneficiaries fell year-on-year, while the number of unemployment benefit (UB) recipients increased significantly. Amid high employment and a fall in the number of long-term unemployed, who are often eligible for FSA, the number of FSA beneficiaries continued to fall year-on-year. In February, 74,256 people were entitled to FSA (original data), which is 6.1% less than in February 2023. The number of UB recipients was 16,967 in February (original figure), up by 8.8% year-on-year. This is mainly due to a slightly higher inflow of persons who are eligible for UB into unemployment. 34.1% of all unemployed people received unemployment benefits in February, which is more than a year ago (29.2%).

Amid lower inflation and an increase in the minimum wage, the year-on-year growth in the average gross wage in January (4.6%) was higher in real terms than in the previous months. In the private sector, the average gross wage increased by 5.5% year-on-year in real terms. Growth was strongest in administrative and support service activities, manufacturing activities, and transportation and storage. Growth in the public sector (3%) was lower than in December, when the higher growth was partly due to public servants’ promotion raises at the end of the year and to the performance-related bonus payments for regular work. 
Nominal year-on-year growth in the average gross wage was slightly lower in January (8.1%) than in previous months. Growth was 8.9% in the private sector and 6.4% in the public sector. 

The year-on-year growth in consumer prices continued to accelerate slightly in March, to 3.6%, while it was almost 7 p.p. lower than in the same month last year. The higher annual inflation compared to February (when it was 3.4%) was due to a higher contribution from services, which rose by 6.1% year-on-year (the highest increase since November 2023, when price growth was 7.4%). The acceleration is largely due to the low base effect in package holidays, which fell by 22.4% month-on-month in March last year due to seasonal fluctuations, while the drop in prices this March was less pronounced (14.3%). The year-on-year price increase in the recreation and culture group was thus 6% and more than doubled compared to February. The monthly inflation was significantly influenced by the effects of seasonal price increases in the clothing and footwear group, which pushed up the price increase for semi-durable goods to 3.6%. With prices in the restaurants and hotels group rising by 0.2% month-on-month, price growth in this group also increased year-on-year (6.7%). The contribution of the transport group also increased slightly in March, due to the rise in prices for petroleum products, but in a year-on-year comparison, the price increase in this group was only 1.3%. Year-on-year price growth in the food and non-alcoholic beverages group continues to slow rapidly and, at 0.9%, was the lowest in three years. Prices of durable goods also remained down year-on-year (by 0.8%).

In February, the year-on-year decline in Slovenian producer prices intensified (-3.5%), due to the monthly decline in prices (-1.0%) and the high base from last year. Month-on-month, prices fell in most industrial groups (with the sharpest fall in energy prices: -8.3), while only prices for capital goods rose slightly. The monthly decline in prices of products on the domestic market was similar to the decline on foreign market (-1.1% and -0.9% respectively). Differences between domestic (-3.4%) and foreign markets (-3.6%) were also small in a year-on-year comparison. The year-on-year price decline in the intermediate goods group further deepened in February (-5.5%), and energy prices were also lower year-on-year for the first time since the start of 2021 (by almost one-fifth). The rise in prices for capital and consumer goods continued to weaken, with growth of just over 1%.

The year-on-year downward trend in the volume of loans granted to domestic non-banking sectors was halted in February this year (0.6%), mainly due to last year’s lower base for corporate and NFI loans. The volume declined year-on-year from July last year to January this year, while lending activity remained relatively subdued in February. As a result, the volume of loans only increased by around EUR 10 million or less than 0.1% on a monthly basis. The year-on-year increase in household loans has stabilised at around 4% over recent months. Growth was to a large extent driven by a 13.8% increase in consumer loans, which has accelerated since the second half of last year, when the Bank of Slovenia lowered the limit on creditworthiness for household borrowing. Growth in the volume of housing loans remains modest and has been below 1% since October last year. The year-on-year decline in the volume of corporate and NFI loans slowed considerably in February (to 3.4%) compared to January. Deposit growth in the non-banking sector remains at around 3%. The maturity structure of deposits is gradually improving. With the rise in deposit interest rates – which, however, are still well below the euro area average – term deposits (20.9% of total domestic non-banking sector deposits) increased by around one-third, while overnight deposits fell slightly (by 2.8%). The quality of banks’ assets remains solid and the share of non-performing loans remained unchanged at 1% at the beginning of the year. 

Yields to maturity of euro area government bonds decreased slightly in the first quarter of this year as inflationary pressure gradually eased. The yield to maturity of the Slovenian bond fell by 25 basis points compared to the previous quarter to 3.16%, the lowest level since the fourth quarter of 2022. The spread to the German bond, which, at 84 basis points, was the lowest since the beginning of 2022, also narrowed slightly. 

The current account of the balance of payments in the last 12 months recorded a surplus of EUR 3 billion, compared to a deficit of EUR 617.1 million in the same period a year earlier. The main reason for the shift to a surplus was the goods trade balance, as imports of goods have fallen more sharply than exports. The surplus in trade in services continued to increase, especially in trade in construction services, such as investment works, construction and assembly services, and trade in transport services. The primary income deficit was lower mainly due to lower net outflows from equity income (dividends and profits) and higher net interest receipts from abroad. The lower secondary income deficit arose from lower net outflows of private sector transfers (increased non-life insurance premiums).

In the first two months of this year, the consolidated general government budgetary accounts showed a surplus of EUR 218 million, which is more than in the same period last year. Revenue in the first two months was 10.6% higher year-on-year. The main contributor to revenue growth was tax revenue, in particular VAT, partly due to the expiry of the reduced VAT rate on energy products, which was in force until the end of May last year. The contribution from personal income tax and from social security contributions, which were boosted by higher wage growth, also remained high. Despite the inflow of funds based on the second payment request under the Recovery and Resilience Facility, which were partially booked in January, total receipts from the EU budget were lower. Expenditure in the first two months was 8.3% higher year-on-year. This was mainly due to transfers to individuals and households, expenditure on goods and services, and expenditure on investments (35.4%). Growth in wages and other remunerations, which were affected by the agreement on wage increases in the public sector, also remained high. Subsidies to companies for the mitigation of the effects of rising energy prices were lower year-on-year. From August 2023 to the end of February 2024, EUR 608 million had been disbursed from the state budget to rectify the consequences of floods and landslides, of which EUR 50 million was disbursed in the first two months of this year.

Slovenia’s net budgetary position against the EU budget was positive in the first two months of 2024 (at EUR 34.7 million). In this period, Slovenia received EUR 129.5 million from the EU budget (9% of receipts envisaged in the adopted state budget for 2024) and paid EUR 94.8 million into it (13.2% of planned payments). The bulk of receipts (43.9% of all reimbursements to the state budget, 19.1% of the planned reimbursements in 2024) were resources from structural funds  and resources from the Cohesion Fund (42.5% of all reimbursements to the state budget, 54.5% of the planned reimbursements in 2024). Receipts for the implementation of the Common Agricultural and Fisheries Policies amounted to 1% of all reimbursements (0.3% of the planned reimbursements in 2024). The highest payments into the EU budget came from GNI-based payments (44.3% of all payments). 
According to the MKRR data, under the Operational Programme for the Implementation of the EU Cohesion policy 2014–2020 (from January 2014 to the end of February 2024), payments from the state budget totalled EUR 3.45 billion (EU share), which corresponds to 103%  of the available funds, while certain payments from the state budget are planned for the first half of 2024 (about EUR 66 million according to estimates made by line ministries). Under the Operational Programme for the Implementation of EU Cohesion policy 2021–2027 (from January 2021 to the end of February 2024), payments from the state budget totalled EUR 23 million (EU share), which corresponds to 1% of the available funds.