Slovenia Inflation


Economic activity remains in the doldrums in Q4

In the fourth quarter, GDP contracted 3.0% over the same quarter the previous year, which was virtually unchanged from the 3.1% drop recorded in the previous three-month period (previously reported: -3.3% year-on-year). In the full year 2012, GDP declined 2.3% (2011: 0.6%), which was broadly in line with the 2.1% fall anticipated by FocusEconomics Consensus Forecast Panellists.

The quarterly contraction mainly reflected a deterioration in domestic demand amid the harsh set of austerity measures implemented in order to lower the country's budget deficit, the weak situation of the banking sector and the increasing political turmoil. Private consumption fell 5.8% over the same period the year before (Q3: -3.8% yoy), while public spending declined 1.3% (Q3: -2.9% yoy). In addition, gross fixed investment plummeted 10.6% in Q4 (Q3: -8.6% yoy).

Meanwhile, the external sector continued to be the only growth engine. Exports of goods and services remained flat in Q4, which represents, nevertheless, an improvement over the 0.4% drop seen in Q3. On the other hand, imports fell a sharp 6.6% (Q3: -5.9% yoy). As a result, the external sector's net contribution to overall economic growth improved from 3.8 percentage points in the third quarter to 4.9 percentage points in the fourth.

On a quarter-on-quarter basis, GDP fell a seasonally and working-day adjusted 1.0% in Q4, which followed the 0.6% decline recorded in Q3.

The Central Bank expects the economy to decline 0.7% in 2013. FocusEconomics Consensus Forecast panellists anticipate that the economy will decline 1.2% in 2013, which is unchanged over the previous month's projection. For 2014, the panel sees the economy growing 0.8%.

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Note: Month-on-month and year-on-year variation of consumer price index in %.
Source: Statistical Office of the Republic of Slovenia (SORS) and FocusEconomics calculations.

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