Slovenia: GDP growth slows in Q1 but remains brisk
May 16, 2022
GDP growth moderated to 9.8% year-on-year in the first quarter, from 10.4% in the fourth quarter of last year. The slowdown was due to weaker private and public consumption and export growth.
Household spending growth waned to 20.0% year-on-year in Q1 from a 22.9% expansion in Q4. Government spending growth softened to the slowest pace since Q4 2021, expanding 2.9% (Q4 2021: +7.0% yoy). Meanwhile, fixed investment growth accelerated to 12.7% in Q1, from the 11.0% expansion in the previous quarter.
Exports of goods and services growth fell to 7.7% in Q1, marking the weakest reading since Q1 2021 (Q4 2021: +12.1% yoy). In addition, imports of goods and services growth waned to 15.7% in Q1 (Q4 2021: +16.8% yoy), marking the softest reading since Q1 2021.
On a seasonally-adjusted quarter-on-quarter basis, economic growth lost steam, cooling to 0.8% in Q1, compared to the previous period's 5.3% increase. Q1's reading was the weakest since Q4 2020.
Noting that the annual Q1 GDP growth figure exceeded their expectations, analysts at Erste Bank commented on the outlook:
“Going forward we expect to see GDP growth decelerating amid a high base effect, increasing price pressures and war in Ukraine. While domestic demand is seen remaining a key growth pillar, private consumption momentum should ease in the coming quarters, taking into account the strong base effect and influence of [a] higher inflation footprint. Investment activity should maintain an overall steady role, still supported by the EU funds […]. On the external demand side, as already confirmed in previous quarters, strong export dynamics should continue to be offset by rising pressures on the imports side.”