Slovenia: Economy shrinks at much slower pace in Q3 as restrictions ease
November 30, 2020
GDP declined 2.6% on an annual basis in the third quarter, softening significantly from the second quarter’s 13.0% drop, as Covid-19 restrictions were eased.
Household spending fell 0.9% in Q3 (Q2: -17.4% yoy), while fixed investment dropped 1.8% (Q2: -14.2% yoy) in the same period. Government consumption, meanwhile, was up 1.4% (Q2: -1.1% year-on-year).
Externally, exports of goods and services fell 9.5% in Q3, well above Q2’s 23.4% collapse, as economic activity strengthened abroad. Imports declined 13.1%, significantly up from Q2’s 24.2% dive. As a result, the external sector contributed positively to growth for the first time since Q1.
On a seasonally-adjusted quarter-on-quarter basis, economic activity soared 12.4% in Q3, contrasting a 9.8% drop in Q2.
Despite the improvement in Q3, the export-oriented economy will likely be facing some headwinds in Q4, stemming from the second wave of Covid-19, which has led to the imposition of social distancing measures across the country’s European neighbors. Moreover, domestic activity should be suffering from the recently imposed restrictions at home. However, the economy should recover robustly next year as restrictions ease. Possible delays in vaccine deliveries and a prolongation of current restrictions in Europe pose downside risks to the outlook, however.
Author: Frederico Teixeira de Abreu, Junior Economist