Slovenia: GDP slows in second quarter
August 31, 2011
In the second quarter, GDP added a paltry 0.9% over the same period last year. The result represented a notable deceleration compared to the 2.3% expansion recorded in the first quarter (previously reported: +2.0% year-on-year) and undershot market expectations of a 1.5% expansion. A quarter-on-quarter analysis does not reveal the deceleration seen in the annual figures, as GDP mirrored the previous month's outturn and rose a seasonally and working-day adjusted 0.1%. The slowdown was driven by a sharp contraction in domestic demand (Q1: +1.2% yoy; Q2: -2.1% yoy). Fixed investment remained depressed for the eleventh quarter in a row and deteriorated markedly from the previous quarter (Q1: -8.3% yoy; Q2: -16.4% yoy), which was partially offset by strong inventory restocking. Private consumption mirrored the previous quarter result of a mild 0.1% increase, while government spending remained flat over the previous year (Q1: +1.9% yoy). In contrast, the external sector, which is Slovenia's main economic engine, continued to outperform despite growth moderating in both exports and imports. Exports expanded 8.3% over the same quarter last year (Q1: +11.1% yoy), while imports rose 3.9% (Q1: +9.6% yoy). As a result, the net contribution from the external sector to overall economic growth stepped up from 1.0 percentage points in the first quarter to 2.9 percentage points in the second. At the sector level, manufacturing slowed from a 9.8% expansion in the first quarter to a 6.2% increase in the second and construction continued mired in recession (Q2: -24.0% yoy). Meanwhile, services slowed to 2.1% and agriculture fell 2.5%.