Slovenia: Economy contracts at record pace in Q2 as the pandemic bites
August 31, 2020
GDP shrank 13.0% on an annual basis in the second quarter, down from the first quarter’s 2.5% decline and marking the sharpest contraction on record.
Household spending plunged 16.6% in Q2 (Q1: -5.8%), while fixed investment dropped 16.7% (Q1: -5.5%) in the same period. Both readings marked the steepest drop on record. Government consumption, meanwhile, was up 1.5% (Q1: +4.9% year-on-year).
Externally, exports of goods and services collapsed, falling 24.5% in Q2, down from Q1’s 1.9% fall. Imports dived 25.0%, significantly down from Q1’s 2.0% decline.
On a seasonally-adjusted quarter-on-quarter basis, economic activity dropped 9.6% in Q2, following a 4.8% drop in Q1.
The export-oriented economy is set to contract markedly this year as a whole, as the pandemic takes its toll. However, the economy should recover somewhat in H2 as exports and domestic consumption rebound. A recent resurgence of Covid-19 cases poses a downside risk.
Author: Frederico Teixeira de Abreu, Junior Economist