In the first quarter of 2021, gross domestic product (GDP) increased by 1.4% compared with the previous quarter and by 1.6% year-on-year. Growth was higher than in the EU on average. This development reflects a slight improvement in the epidemiological situation and the gradual easing of containment measures, as well as the adjustment of the economy and consumers to the changed conditions. The recovery continued, mainly in the activities related to external trade (transportation and export-oriented manufacturing). Gross fixed capital formation increased year-on-year for the second consecutive quarter. Turnover in trade, which had already largely eased in February, was also up year-on-year for the first time since the beginning of the epidemic, partly due to pent-up demand and also partly due to increased spending ahead of the announced lockdown at the beginning of April. This led to slightly higher year-on-year private consumption. However, the containment measures still contributed significantly to a sharp year-on-year decline in some services, which opened more slowly, notably entertainment, sports, recreational and personal services, and hotels and restaurants, hampering faster growth in household consumption. Real government consumption fell year-on-year.

Electricity consumption in May was 8% higher year-on-year but 5% lower than in May of the pre-crisis year 2019. The reason for the higher year-on-year consumption was last year’s low base. However, despite the relaxation of a number of containment measures, consumption remained lower than before the crisis. Higher year-on-year consumption was also recorded among Slovenia’s main trading partners (from 4% in France to 11% in Germany). Compared to May 2019, consumption was down in Austria (6%), France (7%), Croatia (4%) and Italy (4%), while consumption in Germany remained about the same.

In April, electricity consumption by all consumption groups was higher year-on-year, with a wider gap in industrial and small business consumption than in the previous month compared to the same period in the pre-crisis year 2019. In April, industrial electricity consumption was 25.9% higher and small business electricity consumption was 17.3% higher year-on-year. The main reason for this was the base effect, as electricity consumption had fallen significantly in April last year due to the strict containment measures. Household consumption was also up 6.6% year-on-year. Compared to April 2019, industrial consumption fell by 4.9% (down 1.4% in March), while small business consumption fell by 10.9% (down 5.3% in March), mainly due to the temporary tightening of measures at the beginning of this April. Household electricity consumption was 13.8% higher than in April 2019, as people spent more time at home due to the epidemic.

In May, freight traffic on Slovenian motorways increased by 33% year-on-year and decreased by 1% compared to May 2019. Domestic vehicle traffic was 21% higher and foreign vehicle traffic 42% higher than in the same month last year. These strong growth rates are a result of the low base in the same period last year, when traffic was still very limited due to the epidemic. As foreign vehicle traffic fell more sharply then, it is now recovering more strongly year-on-year. In May 2021, domestic vehicle traffic was 4% higher and foreign vehicle traffic 4% lower than in the same period of 2019, but the 60% share of foreign vehicle traffic is still fully comparable to pre-crisis levels, suggesting that the epidemic has not caused a long-term change in traffic patterns.

According to data on the fiscal verification of invoices, turnover in May was 8% higher year-on-year and 3% higher than in the same period of 2019. Relative to April, year-on-year turnover growth increased in some sectors, mainly in tourism-related sectors, where restrictions were lifted earlier than last year. Turnover growth slowed in sectors where measures were also lifted last year (notably trade, which accounts for about three-quarters of turnover), while it was actually lower year-on-year in sectors that recorded a large increase in turnover last year (such as some personal services). Total turnover was 3% higher in May than in the same period of 2019, mainly due to growth in wholesale and retail trade. Turnover in services that were still severely restricted (arts and entertainment, accommodation, travel agencies, gambling and betting) remained significantly lower than in the same period of 2019 (between -67% and -89%), despite the easing of measures.

After a noticeable increase at the beginning of the year, trade in goods remained at a high level in April. Real merchandise exports from and imports to EU Member States have been above pre-crisis levels since late last year, with more pronounced monthly fluctuations due to changes in containment measures in Slovenia and its trading partners. We believe this is also reflected in the pause in the growth of trade in April due to the lockdown in several countries in the weeks around Easter. Despite the restrictions, the impact of the measures on trade was far less negative than during the first wave of the epidemic. It should be noted that the high year-on-year trade growth in the first four months of this year is partly due to the very weak activity in March and April last year (the base effect). The prospects remain favourable, as export expectations improved in May and companies were more optimistic about future foreign demand than before the start of the epidemic.

In the first quarter, foreign trade in services increased but remained significantly lower year-on-year. The measures taken to contain the epidemic, in particular the closure of hotels and restaurants and restrictions on crossing the state borders, continued to have a significant impact on tourism, where export and import revenue in the first quarter was more than 80% lower year-on-year. This is mainly due to the high base, as activity last year did not fall significantly until March. Trade in ICT services was also noticeably lower year-on-year. Activity in some of the other more important service sectors (transport, administrative and support services) was more favourable in the first quarter than during the first wave of the epidemic, but trade in most of these services was still similar to or lower than a year earlier. Trade in construction services was higher year-on-year. Growth in imports of transport services was also notable.

Manufacturing production picked up again in April, mainly reflecting an upturn of production in high-technology industries. Growth also continued in low-technology industries, while the volume of output in medium-low and medium-high technology industries remained at the previous month’s level. Year-on-year production growth in manufacturing was high, mainly due to last year's low base, as production volumes were in line with those of the same period in 2019. Year-on-year growth was the highest in medium- and low-technology industries, while production volume remained the same in high-technology industries. At the industry level, the highest year-on-year growth was recorded in the automotive industry, but the production volume in April was still far behind that of the same period in 2019.

Construction activity declined somewhat in the first quarter. The value of construction output fell by 2.2% and was 4.0% lower than a year earlier. The decline reflects lower activity in non-residential construction, while activity in all other construction segments (civil engineering, residential and specialised construction) strengthened both at current levels and compared with a year ago. Data on the number of contracts suggest that activity in non-residential construction will remain relatively low, while other segments, particularly civil-engineering and specialised construction activities, are likely to perform better.

Turnover in trade increased in the first quarter and was higher year-on-year; it fell again in April, according to preliminary data, reflecting the partial re-closure of stores. Turnover continued to strengthen in March following strong growth in February, which was linked to the re-opening of stores and the lifting of the ban on movement between municipalities. Overall, turnover in the first quarter was up 4.2% year-on-year, driven by strong year-on-year growth in March. In addition to the low base, this was also due to increased sales prior to the re-closure of some stores and the different timing of the Easter holiday. Year-on-year, turnover was up in the first quarter in all three main segments, with the strongest increase of 8.9% in motor vehicle sales, where high sales of new passenger cars to individuals stood out in particular. In April, according to preliminary data, turnover fell due to increased sales at the end of March and the partial closure of stores at the beginning of the month.

Total turnover in market services rose slightly again in the first quarter; it fell only in accommodation and food service activities. Real turnover rose by 1.3% relative to the last quarter of 2020, while at the year-on-year level, it was 3.4% lower. With restrictions on activity still in place, turnover dropped further in accommodation and food service activities. It rose the most in professional and technical activities, reflecting accelerated growth in architectural and engineering services and consultancy services. Turnover also increased in information and communication activities, mainly due to higher turnover in computer services on the domestic market. In administrative and support service activities, turnover growth increased somewhat further mainly as a consequence of renewed growth in employment services. Meanwhile, the strong turnover growth in transportation slowed. In the first quarter, turnover in travel agencies and accommodation and food service activities remained well below last year’s levels (by more than 80% and 60%, respectively). However, in professional and technical activities, transportation, and information and communication activities, last year’s turnover levels were already exceeded in this period.

Household consumption increased significantly in the first quarter and was also higher year-on-year, mainly due to higher consumption of durable goods. Sales of motor vehicles, furniture and household appliances, and computer and telecommunications equipment were about a tenth higher year-on-year, reflecting the easing of restrictions on business activity and the lifting of the ban on movement between municipalities, but also the low base in March 2020 and the announced re-closure of some stores in early April. Mail order and internet sales, which had accounted for about one-fifth of total non-food sales before the epidemic, remained high (almost double). Sales of food, beverages and tobacco were also 6.1% higher year-on-year, partly due to the different timing of the Easter holiday. On the other hand, sales in service activities, most of which remained closed (mainly accommodation and food service activities and arts, entertainment and recreation), continued to fall year-on-year in the first quarter.

In May, economic sentiment improved in most sectors. With the gradual easing of some containment measures in May and, in particular, with the opening of accommodation and food service establishments, confidence improved the most in trade and service activities. Confidence in the export-oriented part of the economy and construction improved as well and was higher than before the beginning of the epidemic. Consumer confidence remains low but is gradually improving. Compared with the period before the epidemic, consumers are more pessimistic particularly about the future economic conditions and, hence, their future financial situation.

The number of registered unemployed continued to decline in May. In addition to seasonal impacts, which did not differ significantly from those in the pre-epidemic period, the decline was also related to the gradual easing of containment measures as well as economic recovery and the improved situation in the labour market. At the end of May, 75,148 people were unemployed, 5.2% fewer than at the end of April and 16.9% fewer than a year earlier. However, compared with the end of May 2019, the number was 4.4% higher. The number of employed persons according to the Statistical Register of Employment (SRE) was 0.5% lower year-on-year in March, which is less than in previous months, mainly due to the base effect (there was a sharp decrease in March 2020 due to the outbreak of the epidemic). The year-on-year decline was again the strongest in accommodation and food service activities and administrative and support service activities, i.e. activities that were hit hardest by containment measures, while the largest increase was recorded in health and social work.

In the first quarter of this year, wages increased year-on-year, mainly due to the payment of crisis bonuses in the public sector. With the renewed payment of bonuses (the extraordinary payment of bonuses for hazardous working conditions and additional workload and the payment of a bonus for work in crisis conditions in accordance with the collective agreement), year-on-year wage growth in the public sector increased again towards the end of last year and in the first quarter of this year, by far the most in the social work and health sectors (it was 31.3% in March; 16% in the public sector as a whole). Year-on-year wage growth in the private sector was lower in the second wave of the epidemic than in the first, largely due to the payment of bonuses in the first wave. The sharp year-on-year increase in the sector in March this year was a consequence of the base effect (the fall in wages in March 2020 when the epidemic was declared).

In May, consumer price growth remained at 2.1%. Most of this growth was still the result of higher year-on-year energy prices (petroleum products and electricity), mainly due to the lower base and, to a lesser extent, current growth in petroleum product prices. While the prices of semi-durable goods were well below the year-earlier level at the beginning of the year, their year-on-year growth has gradually strengthened in recent months, reaching 1.6% in May. According to our estimates, this was again mainly due to rising prices for clothing and footwear, as prices for new collections have increased more than in previous years. The prices of durable goods also rose at a similar rate year-on-year. Prices in the food and non-alcoholic beverages group and services remain lower year-on-year (by -2.5% and -0.6%, respectively) The price decline for package holidays intensified in May despite the opening of some accommodation activities, while the price increase in the communications group accelerated again.

Year-on-year growth in Slovenian industrial producer prices rose to 2.4% in April. Price growth in the domestic market continues to be driven by price increases in intermediate and capital goods and energy. The growth in energy prices is entirely a result of the lower base as the government temporarily exempted households and certain small business consumers from paying electricity charges in the first wave of the epidemic. Otherwise, energy prices actually fell in the first four months of this year compared with December 2020. In foreign markets, the year-on-year increase continues to be driven mainly by higher prices of capital and intermediate goods. The combined increase in consumer goods prices in the domestic and foreign markets remains modest year-on-year (0.1%).

In the first quarter, the current account surplus remained higher year-on-year, with growth driven mainly by the surplus in trade in goods. The increase in the surplus in trade in goods was a result of higher real growth in exports than imports amid deteriorated terms of trade. The surplus in trade in services continued to narrow. Measures to contain the epidemic had a particularly hard impact on trade in travel services, which was 80% lower year-on-year. On the quarterly level, the surplus in trade in travel services was the lowest ever, at EUR 35 million. Net outflows of primary income continued to decline, mainly due to lower net payments of income on equity and interest on external debt. The surplus also strengthened due to lower net outflows of secondary income, which fell mainly as a result of higher receipts (social revenues) from the EU budget.

The volume of loans to the domestic non-banking sector declined again in April compared with the same period a year earlier. The year-on-year decline in the volume of loans to enterprises and NFIs remained broadly unchanged. Growth in loans to households picked up again slightly in April after a decline earlier in the year, but remained modest at 1.5%. Year-on-year growth in housing loans and loans for other purposes strengthened, while the decline in consumer loans moderated for the second month in a row. Year-on-year growth in domestic non-banking sector deposits has gradually slowed in the last two months, but is still above 10%. Both corporate and household deposits are growing at a slower pace, which we estimate is due to increased demand to finance business activity and consumption. We estimate that the slowdown in households is also due to the outflow of a small part of savings from the banking system due to the introduction of deposit fees in some banks. With low lending activity and relatively high deposit growth, banks are investing an increasing part of their funds in Central Bank accounts, which already account for more than 15% of the banking system’s total assets. In April, their volume increased by more than 70% year-on-year. The share of non-performing claims remained just below 2%.

In April, the dynamics of the consolidated balance of public financing was more favourable than in previous months. The overall deficit of the consolidated balance in the first four months (EUR 1.2 billion), which showed a surplus in April, narrowed slightly compared to the first quarter of the year (EUR 1.3 billion). This development was due to the increase in economic activity following the lifting of certain restrictions on business activities in the service sector, which led to higher tax revenues. Tax revenues were also higher year-on-year due to the impact of intervention measures that allowed tax deferrals and instalment payments (mainly VAT and excise duties), which were higher last year than this year, as well as the exemption of advance corporate tax payments last year and higher wage growth due to the payment of bonuses in the public sector at the time of the epidemic. In addition, the more favourable evolution in April is also attributable to expenditure on measures to mitigate the impact of the epidemic, which was among the lowest of the year in April (EUR 234 million). Overall, expenditure for this purpose amounted to EUR 1,160 million in the first four months of the year.

Slovenia’s net budgetary position against the EU budget was positive in the first four months (EUR 68.6 million). During this period, Slovenia received EUR 306.5 million from the EU budget (18.9% of the budgeted revenues for the current year) and paid EUR 237.9 million into it (42.1% of its annual obligations towards the EU budget). Almost half of the receipts (47.7%) came from the Common Agricultural and Fisheries policy, a good third (38.7%) from the structural funds, and the smallest part from the Cohesion Fund (12.3%). According to SVRK data, 110% of the total available funds was approved in the current financial period (from January 2014 to the end of March 2021), while the confirmed operations accounted for 90% and payments to beneficiaries 54%. All executed payments were reimbursed from the EU budget to the state budget.