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The sentiment indicators suggest that the dynamics of economic activity in the euro area improved in the first quarter of this year but remained weak. In its March projections, the ECB forecasts economic growth to gradually pick up during this year. The composite Purchasing Managers’ Index (PMI), which has been rising since the end of last year, turned from contraction to expansion in March for the first time since May last year. Growth was supported by the services PMI, which recorded its highest reading in nine months, while the manufacturing PMI, which recorded its lowest reading in three months, indicates further contraction of activity in this segment. Following a deterioration in February, the Economic Sentiment Indicator (ESI) for the euro area, which has been below its long-term average since the mid-2022, improved in March, with sentiment increasing in most activities and among consumers. Compared to the same period last year, economic sentiment deteriorated in March, with confidence significantly lower in manufacturing and construction and higher only among consumers. The Ifo index, which measures business climate in Germany, improved markedly in March, moving slightly away from the post-epidemic lows. Growth is projected to strengthen gradually over the coming quarters, mainly driven by rising private consumption supported by increased confidence, low unemployment and wage growth, and a further decline in inflation. Growth will also be supported by stronger foreign demand. The ECB's economic projection, which is subject to considerable uncertainty in connection with the development of the conflict in the Middle East, is 0.6% for the euro area in 2024 and 1.5% in 2025.

Sentiment in the Slovenian economy was still lower in the first quarter than in the same period last year, but better than at the end of the year. Short-term economic indicators also point to a recovery in the first two months – they have largely reached the level of a year ago, except in construction. Economic sentiment in the first quarter was better on average than in the fourth quarter of last year, despite a slight deterioration in February and March. With price developments easing, sentiment improved among consumers and in services. However, economic sentiment is still lower than a year ago, while it has improved among consumers. Although the values of the competitiveness indicators further improved in the first quarter of 2024, they point to unfavourable price competitiveness of Slovenian exporters. In February, real exports and imports of goods continued to fall month-on-month; following a decline, exports were higher in the first two months, while imports remained lower than in the same period last year. Trade in services reached the year-ago level in January. Trade in transport services in particular, which fell markedly year-on-year, continues to be significantly impacted by the subdued economic growth in Slovenia’s main trading partners. Trade in most other main groups of services was higher year-on-year. Manufacturing output continued to increase in February. Since the beginning of the year, it has risen in all industry groups according to technology intensity. In the first two months, it was also slightly higher year-on-year. The value of construction put in place fell in January. This was the first time in two years that it was also down year-on-year. In January, total real turnover in market services remained at the level of December 2023, while it was higher year-on-year. Real turnover in most trade sectors continued to rise in January; only in wholesale trade was it lower year-on-year. Household consumption is rising, as the figures on the value of fiscally verified invoices show. At the beginning of the year, households spent more on tourist services, durable and semi-durable goods and food than in the same period last year.

Growth in the number of persons in employment continued at the beginning of the year, as did the decline in the number of unemployed. Amid lower inflation and an increase in the minimum wage, the increase in average gross wage was more pronounced in real terms in January than in previous months. Growth in the number of persons in employment was slightly higher in January than in previous months due to methodological changes. The growth was primarily due to the higher number of employed foreign nationals, with a particularly high share in construction, transportation and storage, and administrative and support service activities. In March, the monthly decline in the number of registered unemployed (0.9%, seasonally adjusted) was similar to February. At the end of March, 46,877 persons were unemployed, which is 6.9% less than a year ago. Amid labour shortages, the number of long-term unemployed (more than one year) fell by 14.9% year-on-year at the end of March, while the number of unemployed over 50 fell by 9%. Amid lower inflation and the increase in the minimum wage, the year-on-year increase in the average gross wage in the private sector was more pronounced in real terms in January than in previous months (5.5%). Real growth in the public sector (3%) was lower than in December, when it was affected by public servants' promotion raises at the end of the year and the performance-related bonus payments for regular work. 

The year-on-year growth in consumer prices accelerated slightly in March, to 3.6%, mainly due to a higher increase in services prices, while compared to March last year, annual inflation fell by almost 7 p.p. Services prices rose by 6.1% year-on-year (the highest increase since November 2023, when price growth was 7.4%). The higher growth of prices was largely due to the low base effect in package holidays, which fell by 22.4% month-on-month in March 2023 due to seasonal fluctuations, while the drop in prices this March was less pronounced (14.3%). The contribution of the transport group also increased slightly in March due to the rise in prices for petroleum products, but in a year-on-year comparison, the price increase in this group was only 1.3%. Year-on-year price growth in the food and non-alcoholic beverages group continues to slow rapidly and, at 0.9%, was the lowest in three years. Prices of durable goods further declined year-on-year (by 0.8%). 

In the first two months of this year, the consolidated general government budgetary accounts showed a surplus of EUR 218 million, which is more than in the same period last year. Revenue increased by 10.6% year-on-year in the first two months of 2024. The main contributor to growth was tax revenue, in particular VAT. The contribution from personal income tax and from social security contributions, which were boosted by higher wage growth, also remained high. Expenditure in the first two months was 8.3% higher year-on-year. This was mainly due to transfers to individuals and households, expenditure on goods and services and growth in expenditure on investment. The growth in wages and other remunerations also remained high as a result of the agreement on public sector wage increase. Subsidies to companies to mitigate the consequences of rising energy prices were lower year-on-year.