Winter Forecast of Economic Trends 2020
In the Winter Forecast IMAD projects a 6.6% decline in GDP for this year. After a deep fall in the second quarter, the economy recovered even more than expected in the third quarter. For the last quarter, we expect a renewed decline, but it will be smaller than in the spring, partly due to the adaptation of businesses and consumers to the new circumstances. We estimate that the economic impact of the second wave of the epidemic will be concentrated mainly on the service sector and less on activities integrated into international trade. Given the strong recovery in the third quarter, the decline in GDP in the year as a whole is set to be similar to that forecast in the autumn, despite the renewed deterioration in epidemiological conditions in the last quarter. Owing to the deteriorated epidemiological conditions, the more pronounced economic recovery is being delayed into the second half of next year. Economic growth in 2021 (at 4.3%) is consequently expected to be lower than predicted in our Autumn Forecast (5.1%). With the retention of some restrictions in Slovenia and its trading partners, the recovery will be gradual and differentiated across sectors. The greatest risk to the realisation of the forecast is still associated with the duration and severity of the epidemic. A longer and stronger second wave of infections with stricter containment measures or possible new waves of infections and thus further major closures of economies will continue to represent the greatest risk to a stable recovery. A gradual and well-planned lifting of measures for mitigating the consequences of the epidemic will also play an important role as epidemiological conditions improve. In the event of a faster permanent improvement in epidemiological conditions or faster-than-expected availability of a vaccine or medicine for widespread use, activity could also recover more rapidly than predicted.