News

Sentiment indicators for the euro area and Germany deteriorated in the fourth quarter of 2024. The average Purchasing Managers’ Index (PMI) for the euro area dropped to 49.3 in the fourth quarter. The Economic Sentiment Index (ESI) for the euro area was lower in the fourth quarter than in the third and similar to its level in the fourth quarter of 2023. The Ifo indicator, which measures the business climate in Germany, also declined quarter-on-quarter in the fourth quarter and was also lower year-on-year. According to the ECB’s December forecast, the euro economy grew by 0.7% in 2024 and is expected to rise to 1.1% this year and 1.4% next year. German institutions have significantly downgraded their forecasts for economic growth in Germany for this year and next. 

In Slovenia, activity in most sectors was stronger year-on-year in the first ten to eleven months of 2024; economic sentiment remained at a low level, though it was still slightly improved year-on-year. Real exports of goods, which have stagnated since the slump in September, were 3.5% higher year-on-year in the first 11 months of 2024. Manufacturing output rose slightly from mid-2024 and was 1.2% higher year-on-year. Price competitiveness indicators have continued to improve, cost pressures in manufacturing have gradually eased and, according to data for the first three quarters of 2024, the export market share of goods has increased for the second consecutive year. After several months of gradual decline, construction activity rose markedly in November 2024, though it remained lower compared to the first 11 months of 2023. Real turnover in market services fell significantly from mid-2024 and was 1.6% higher year-on-year in the first ten months of 2024. Real turnover in trade, where growth increased month-on-month in the second half of the year, was up year-on-year in the first ten months (by 2.7%). The available indicators point to year-on-year growth in private consumption in the fourth quarter of 2024. Consumer confidence improved at the end of the year and was higher than a year ago. Economic sentiment, which remained low, improved slightly year-on-year at the end of 2024, but was still below the long-term average. 

Developments on the labour market remained subdued in the final months of 2024 amid record high employment and low unemployment; year-on-year wage growth in October 2024 was slightly higher than in the previous months. The number of persons in employment, which had mostly stagnated at record-high levels since mid-2023 (aside from a temporary increase at the beginning of 2024 due to a methodological change), experienced a slight increase in November 2024. Growth continued in public services (all seasonally adjusted). In the first 11 months, the number of persons in employment was 1.2% higher than a year earlier. The overall year-on-year growth in the number of persons in employment was driven by foreign nationals, who made up 15.9% of the total labour force in November, 1.2 p.p. more than a year earlier. At the end of 2024, 47,038 persons were unemployed, representing a 2.7% decrease compared to December 2023. On average, 45,982 people were unemployed in 2024, a decline of 5.6% compared to the previous year. In October, year-on-year real growth in the average gross wage was higher than in previous months (6.8%), amid higher nominal growth (6.5%) and low (zero) inflation. In the public sector, wage growth was primarily driven by an increase in the value of the pay scale grades following a partial wage adjustment for inflation in June. In the private sector, where wage growth has outpaced that of the public sector, labour shortages continue to play a key role in driving wage increases. 
Figure: In the first three quarters of 2024, Slovenia’s market share in the EU market returned to levels comparable to those seen before the pandemic and the energy crisis

Year-on-year inflation increased slightly in December 2024 (by 0.2 p.p. to 1.9%); it was less than half as high as a year earlier (4.2%). The slightly higher year-on-year inflation was largely driven by a lower base effect, resulting from a drop in petroleum product prices at the end of 2023, and year-on-year higher prices in the food and non-alcoholic beverages group, which contributed about a quarter to the year-on-year inflation. Energy prices rose by 0.5% in 2024. The year-on-year increase in prices of semi-durable goods slowed at the end of the year (2.0%). The year-on-year price decline for durable goods remained steady at around 1% throughout most of 2024. After declining during the year, the year-on-year growth in services prices in December (2.7%) was similar to that recorded in November. Year-on-year HICP inflation in December was 2.0% in Slovenia and, according to preliminary estimates, 2.4% in the euro area. 

The deficit of the consolidated general government budgetary accounts amounted to EUR 485.6 million in the first 11 months of 2024, which is 595.5 million lower than in the first 11 months of 2023. Growth in general government revenue was in addition to higher revenues from social contributions, resulting from the transformation of the complementary health contribution into a mandatory contribution, primarily driven by increased corporate income tax revenues and non-tax revenues, and more markedly also revenue from personal income tax. Expenditure growth was driven by growth in transfers to individuals and households, allocations to the budgetary funds, growth in expenditure on goods and services, and growth in expenditure on salaries and wages and other personnel expenditures. Investment expenditure was lower year-on-year. According to preliminary data from the Ministry of Finance, the general government deficit, which makes up the largest part of the consolidated balance sheet, widened in December, mainly due to allocations to the Reconstruction Fund to finance flood recovery measures in the coming years and higher investment expenditure. In 2024, it was lower than estimated during the adoption of the 2025 and 2026 budgets and the lowest in five years (800 million or 1.2% of projected GDP).