Slovenia Government Consumption (ann. var. %)

Government Consumption in Slovenia

GDP growth gains steam in the first quarter

GDP growth accelerated to 0.7% year on year in the first quarter, from 0.2% in the fourth quarter of last year. A rebound in exports and stronger investment activity drove the reading.

Household spending growth moderated to 2.1% yoy in Q1 from a 2.6% expansion in Q4. Government spending contracted 1.9% in Q1 (Q4 2022: -1.0% yoy). Fixed investment growth improved to 6.5% in Q1, from a 5.9% expansion in the prior quarter.

On the external front, exports of goods and services increased 1.9% on an annual basis in the first quarter, which contrasted with the fourth quarter’s 2.5% contraction. Conversely, imports of goods and services dropped at a sharper pace of 3.8% in Q1 (Q4 2022: -1.5% yoy).

On a seasonally adjusted quarter-on-quarter basis, economic growth eased 0.6% in Q1 from the previous quarter’s 0.7% expansion.

Economic momentum is set to inch down in Q2 this year as still-elevated inflation, higher interest rates and the downturn in the German economy continue to weigh on activity. Tighter-than-expected monetary policy from the ECB is a downside risk.

On the outlook, EIU analysts commented:

“Some support will come from inflows of EU funds and easing global supply-chain frictions, but shortages of intermediate goods (such as semiconductor chips) will continue to restrict industrial activity in Germany and Italy, Slovenia’s main export markets. Domestic gas-intensive industries—especially chemicals, paper and basic metals—struggled with last year’s surge in energy prices.”