Slovenia: Economy contracts on Q1 on Covid-19 fallout
May 29, 2020
GDP shrank 2.3% on an annual basis in the first quarter, contrasting Q4 2019’s 1.7% expansion and marking the sharpest contraction since Q1 2013.
Household spending plunged 6.4% in Q1, marking the fastest drop in seven years (Q4 2019: +1.2% year-on-year). Public spending rose 5.8% in Q1 (Q4 2019: -2.0% yoy). On the other hand, fixed investment fell 6.3% in Q1, down from the 4.5% drop logged in the previous quarter.
Exports of goods and services fell 1.6% in the first quarter, contrasting Q4 2019’s 0.9% expansion. Meanwhile, imports of goods and services declined 2.5% in Q1 (Q4 2019: -0.8% yoy). Taken together, the external sector contributed 0.5 percentage points to overall GDP in Q1, down from Q4 2019’s 1.3 percentage point contribution.
On a quarter-on-quarter, seasonally-adjusted basis, economic activity dropped 4.5% in Q1, contrasting Q4 2019's 0.4% increase.
The export-oriented economy is set to contract this year as Covid-19 takes its toll. Capital spending will likely decline amid deteriorating sentiment and heightened uncertainties in the all-important automotive sector. In addition, exports are likely to slump on muted European demand and falling tourist arrivals.
Author: Nicolás J. Aguilar, Economist