Consumption in Slovenia

Slovenia - Consumption

Economy grows at weakest stride in nearly four years in Q2

The economy grew 2.5% year-on-year in the second quarter, marking a notable deceleration from the first-quarter’s 3.3% upturn, according to detailed data released by Slovenia’s Statistical Institute on 30 August. The second-quarter’s expansion was the weakest since Q3 2015.

A negative contribution by net exports drove the slowdown, contrasting the positive contribution in Q1. While annual export growth climbed from 7.9% in Q1 to 9.4% in Q2 despite the challenging external conditions, imports accelerated more sharply (Q2: +12.3% year-on-year; Q1: +7.7% yoy), reflecting the strengthening of domestic demand. Taken together, the external sector deducted 1.3 percentage points from growth in Q2, contrasting a 0.8-percentage-points addition in the previous quarter.

On the other hand, domestic demand picked up in the quarter (Q2: +4.2% yoy; Q1: +2.7% yoy). The improvement reflected higher private consumption growth, which rose to 3.4% from 2.3% in the first quarter, buoyed by a tight labor market and despite consumers turning more pessimistic in the period. Meanwhile, fixed investment growth fell, albeit remained strong, weighed on by weaker business sentiment (Q2: +6.9% yoy, Q1: +10.0% yoy). Moreover, government consumption decelerated sharply in the quarter, limiting the expansion in domestic demand (Q2: +1.0% yoy; Q1: +3.9% yoy).

On a seasonally- and working-day adjusted, quarter-on-quarter basis, the economy grew 0.2% in the second quarter, decelerating from Q1’s 0.6% expansion.

The Central Bank expects GDP to grow 3.2% in 2019 and 2.9% in 2020. FocusEconomics Consensus Forecast panelists expect the economy to grow 3.3% in 2019, which is unchanged from last month’s forecast, before moderating to 2.9% in 2020.