Slovenia: Economy remains in recession
November 30, 2012
In the third quarter, GDP contracted 3.3% over the same quarter last year, which was virtually unchanged from the 3.2% drop recorded in the second quarter. The decline marked the steepest annual contraction recorded since the last quarter of 2009 and exceeded market expectations that had the economy declining 3.0%. The deterioration in the third quarter reflected the strong austerity measures implemented by the government as well as the country's struggle with a banking crisis. Domestic demand deteriorated compared to the previous period, as total consumption fell 3.0% in Q3 (Q2: -2.5% year-on-year), dragged down by a contraction in both private consumption (Q3: -3.0% yoy) and government spending (Q3: -3.1% yoy). In addition, gross fixed investment plummeted 8.8% in Q3 (Q2: -7.8% yoy). Meanwhile, the external sector improved somewhat in Q3. Exports of goods and services fell 0.7% in the third quarter (Q2: -0.3% yoy), while imports plunged 5.1% (Q2: -3.8% yoy). As a result, the external sector's net contribution to overall economic growth improved from 2.6 percentage points in the second quarter to 3.2 percentage points in the third. A quarter-on-quarter analysis corroborates the deterioration seen in the annual figures, as GDP fell a seasonally and working-day adjusted 0.6% in Q3, which followed the 1.1% decline recorded in Q2, thus putting the economy in a technical recession.
Author: Ricardo Aceves, Senior Economist