Economic growth remains strong despite a slight moderation in the second quarter of 2007
According to the Statistical Office of the Republic of Slovenia, economic growth totalled 5.9% in the second quarter and 6.5% in the first half of the year, which is considerably higher than the 2006 average (5.7% after the revision of national accounts). Vigorous investment activity, particularly in construction, and high export growth continued to be the main engines of the economic expansion, which is also in line with the expectations of the Institute of Macroeconomic Analysis and Development based on current data. Employment trends similarly remained favourable, supported by the strong business cycle. Total employment increased by 2.7%. The highest increases were recorded in construction, business services and transport; employment growth also picked up in manufacturing.
GDP growth figures for the second quarter confirm the expectations of the Institute of Macroeconomic Analysis and Development regarding the continuation of favourable economic trends based on the currently available data. “Economic growth is expected to decelerate slightly in the second half of the year," said Boštjan Vasle. "Nevertheless, it will remain at a high level and probably exceed our Spring Forecast by the end of the year, when it is projected to total more than 5%."
Real GDP growth totalled 5.9% in the second quarter. Despite the moderation in comparison with the first quarter (7.2%), economic growth remains strong. Maja Bednaš added, "The structure of economic growth remained favourable in the second quarter, since it was still largely underpinned by investment activity and foreign demand, and by manufacturing production, construction and market services on the supply side. The data about further strong growth of employment, propelled by the strong business cycle, are also positive."
IMAD reports that investment activity again enjoyed the highest increase (21.4%), recording a similar growth rate as in the first quarter. Within gross fixed capital formation, investment in motorway construction as well as buildings continued to expand at a rapid pace, while the growth of investment in machinery and equipment also benefited from the one-off effect of the purchase of transport equipment, which gave a boost to this segment in May. The slight moderation in the growth of goods exports, which nevertheless remained strong (from 13.8% to 12.5%) was cushioned by the stronger growth of services exports (from 16.7% to 18.8%), so that the growth of total export activity did not change significantly (13.6%, down from 14.3% in the first quarter). Following the pickup in the growth of domestic consumption (from 7.2% to 8.1%), which saw increases in the growth of private consumption (from 3.0% to 3.4%) and the contribution of the change in inventories (from 0.2 to 0.9 p.p.), import growth accelerated as well (from 14.6% to 17%).
On the supply side, the main contributors to the growth of value added were manufacturing (9%) and construction (25.7%), even though the latter posted a somewhat smaller increase than in the first quarter. Value added also continued to grow at a robust pace in most market services. The highest growth rates were recorded in financial intermediation (8.1%) and distributive trades (7.8%), along with transport, storage and communications (5.8%) and business services (5.1%). Only hotels and restaurants witnessed relatively moderate growth (2.8%). As in the first quarter, the growth rates of value added in public services remained low, falling short of the comparable figures from 2006.
