Slovenia Merchandise Exports (ann. var. %)

After growth slowed in annual terms in Q3 last year, the economy almost flatlined in Q4. This brought the growth rate for 2022 to 5.4%, in line with our panelists’ expectations. The downturn in Q4 was broad-based. Private consumption and fixed investment grew at a weaker pace, while public spending fell at a steeper rate and exports plunged into contraction. Elevated inflation, tighter financial conditions and weaker external demand weighed on activity. In Q1 this year, the economy will likely lose further speed. Despite moderating in January, inflation remains elevated, while prolonged pessimism of both businesses and consumers bodes poorly for activity. More positively, the energy price caps and the minimum wage increase introduced in January should offer some support to private consumption ahead. Activity will receive a further boost from the record-high government spending budgeted in 2023.