News

Uncertainty in the international environment remains high at the end of the year and available sentiment indicators point to a contraction in euro area economic activity in the last quarter of this year. The high level of uncertainty is further influenced by energy market conditions. Other major risks include prolonged high inflation and the extent and impact of monetary tightening. Sentiment indicators (ESI, PMI, ifo) for the euro area and Slovenia’s main trading partners mostly rose slightly in November as conditions in supply chains and in general improved and energy prices fell. Nevertheless, indicators remain at very low levels and point to a decline in euro area activity in the last quarter of this year. Prices of most energy commodities were also lower in November than in previous months, but still remain high. 

Growth in economic activity slowed in most segments at the beginning of the last quarter of this year; economic sentiment stopped deteriorating in November. Growth in the export-oriented sectors is slowing, real exports of goods to EU Member States declined in current terms in October, while the volume of production slowed or remained unchanged in most manufacturing activities, with the exception of high-technology activities. Household expenditure was somewhat lower than in previous months, especially in trade, and, according to preliminary SURS data, turnover fell in real terms in most trade sectors. Real turnover in most market services and the value of construction put in place also declined slightly in September. Economic sentiment stopped deteriorating in November and confidence indicators rose in all segments. However, the value of the economic sentiment indicator remains significantly lower than a year ago, mainly due to lower confidence in manufacturing and among consumers. 

Consumption of natural gas and electricity was lower than a year ago. According to the preliminary data, natural gas consumption in Slovenia from August to the beginning of December was 15% below the comparable average of the last five years, which is in line with EU recommendations, while electricity consumption in November was 6% lower year-on-year. The sharpest decline was recorded by industrial consumption, which was primarily due to favourable weather conditions in October, as well as measures to reduce gas consumption and industry’s reaction to high gas and electricity prices by reducing production output and thus consumption. 

Employment continues to rise, while the number of unemployed continues to fall; the average gross wage continues to fall in real terms. As employment reached its peak, growth in the number of persons in employment was 2.2% year-on-year in September, slightly lower than in previous months. Growth remained high especially in construction, which is characterised by a high proportion of foreign workers and a major labour shortage. The number of registered unemployed continued to fall, with the number of long-term unemployed also decreasing due to high demand for labour and labour shortages. 52,541 people were unemployed at the end of November, 0.8% less than at the end of October. In the face of high inflation, the average gross wage fell again in real terms year-on-year in September. The decline was more pronounced in the public sector due to last year’s high base related to the payment of COVID-19 bonuses.

Year-on-year growth in consumer prices remained high in November. Over the past three months, inflation has hovered around 10%, which is slightly lower than in the summer months. Inflation was broad-based and mainly driven by prices of food and non-alcoholic beverages in November, which were 19% higher year-on-year. The rise in prices of energy also still had a strong effect, especially of solid fuels and petroleum products. After almost two years of continuous growth, Slovenian industrial producer prices fell in October, although year-on-year growth was still relatively high.

The general government deficit totalled EUR 375 million in the first ten months, significantly lower than in the same period last year. The lower deficit of the consolidated general government budgetary accounts was mainly due to high revenue growth and significantly lower expenditure growth. The growth in revenues, which this year is mainly underpinned by the growth of tax revenues (corporate income tax and VAT) and revenues from the EU budget, is slowing due to the slowdown in economic activity and the reduction in the tax burden on energy and wages. Expenditure growth this year is significantly lower than last year due to lower payments related to measures to mitigate the consequences of the epidemic (the wage bill, transfers to individuals and households, and subsidies). In the last two months of the year, we expect the government budget deficit to increase, in particular due to the strengthening of growth in capital expenditure, the payments for measures to mitigate the effects of inflation and the increase in public sector wages.