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Economic sentiment indicators in the euro area deteriorated in March due to the war in the Middle East, but on average in the first quarter they still pointed to continued economic expansion. In the baseline scenario of its April forecast, the IMF marginally lowered its projections for global and euro area economic growth; given the elevated uncertainty, it also developed two alternative scenarios. The average value of the composite Purchasing Managers’ Index (PMI) in the first quarter was slightly lower than in the previous quarter, but remained above 50, indicating continued expansion in economic activity. The Economic Sentiment Indicator (ESI) declined noticeably in March, mainly owing to weaker consumer confidence, but on average in the first quarter it was still higher than in the previous quarter and in the same period last year. In its April forecast, the IMF also slightly downgraded its baseline projections for global and euro area economic growth. Under the baseline scenario, which assumes the conflict in the Middle East continues until mid-year and energy prices rise moderately in 2026, global economic growth is projected at 3.1% this year (0.2 p.p. lower than in the IMF’s January outlook) and 3.2% next year. Economic growth in the euro area will slow to 1.1% this year and remain at a similar level next year (1.2%). Compared with its January forecast, the IMF revised its projections downward for both years by 0.2 p.p., mainly due to the sharp increase in energy prices associated with the war in the Middle East. According to the IMF, downside risks to the forecast prevail. A more prolonged or broader conflict in the Middle East, smaller-than-expected effects of artificial intelligence on productivity growth, or a renewed escalation of trade tensions could significantly weaken global growth. Under the IMF’s adverse and more severe scenarios, which assume a more pronounced increase in energy prices this year and disruptions caused by damaged energy infrastructure, global economic growth would slow further to 2.5% and 2% respectively this year.
 

Indicators of economic developments in Slovenia at the beginning of the year pointed to a current improvement in the export-oriented sector of the economy and in construction, while growth in household consumption moderated. Manufacturing output increased markedly in February and exceeded the level recorded a year earlier. In the first two months of the year, it declined year-on-year, primarily reflecting a sharp drop, according to our estimate, in January in the pharmaceutical industry, which is characterised by significant monthly volatility. Production was also lower than a year earlier in all energy-intensive industries. Goods exports increased month-on-month in February for the second consecutive month. Growth was driven mainly by higher exports of goods to non-EU countries, especially Russia, the United Kingdom and the United States, while exports to Slovenia’s main EU trading partners declined. By product group, exports of pharmaceutical and chemical products, metals and metal products, and miscellaneous fabricated products increased. Exports of motor vehicles, which exhibit pronounced monthly volatility, and other machinery and equipment declined. Exports of services, particularly transport services, which are conducted predominantly with EU countries, decreased noticeably on a monthly basis. Real goods imports declined for the third consecutive month in February, mainly due to lower imports of certain energy commodities. In the first two months, with one fewer working day this year, both real exports and imports of goods were lower year-on-year. After several months of decline, the value of construction put in place increased in February and was one quarter higher year-on-year. Real turnover in most trade sectors declined in January and was also lower year-on-year. Total real turnover in market services remained at the December level in January and was still higher year-on-year in all activities except transport. In January, following last year’s record sales over the past six years, the number of new passenger cars sold to private individuals was significantly lower year-on-year. After relatively strong growth at the end of last year, households in January spent less year-on-year on food, beverages and tobacco, but more on non-food products. In January and February combined, expenditure on tourism services abroad and in Slovenia was higher year-on-year. Data on the nominal value of fiscally verified invoices also indicate moderate growth in household consumption in January and February (as reflected in preliminary data on retail trade turnover for February), while an increase was recorded in March (excluding the sharp rise in motor fuel sales related to the conflict in the Middle East). Following a marked deterioration in February, the economic sentiment indicator improved slightly in March, particularly in retail trade and in manufacturing and services. Overall, economic sentiment in March remained weaker than a year earlier, with all confidence indicators lower except for consumer confidence.

The number of persons in employment remained almost unchanged in February, with considerable differences across activities. The number of unemployed was also similar in March to the previous two months and slightly lower than at the end of last year. The sharp increase in the minimum wage in January led to an acceleration of the year-on-year nominal growth in the average gross wage. The number of persons in employment has been stagnating for several months (seasonally adjusted), with considerable variation across activities. Employment has been declining particularly in manufacturing and trade, while increasing in public service activities, especially in health and social work. The number of unemployed persons in March remained broadly unchanged compared with the previous two months and slightly lower than at the end of last year (-0.7%, seasonally adjusted), while year-on-year it was 0.2% lower. Year-on-year nominal growth in the average gross wage was high in January (6.7%), mainly due to high growth in the private sector (7.2%), which was significantly influenced by the increase in the minimum wage. Year-on-year wage growth accelerated particularly in trade, accommodation and food service activities, administrative and support service activities (including employment agencies), and construction. In the public sector, growth remained relatively high, linked to the wage reform, the agreed increase in base wages at the beginning of last year, and collective bargaining agreements. In real terms, the average gross wage increased by 4% year-on-year in January – by 4.5% in the private sector and 2.8% in the public sector.

Year-on-year growth in consumer prices slowed to 2.5% in March, mainly due to a base effect in electricity prices, which rose markedly in March last year; the rise in petroleum product prices linked to the oil crisis has largely not yet been reflected in March inflation. In March 2025, electricity prices increased markedly, despite the shift to the low tariff season, following the expiry of the Act on emergency measures to mitigate the impact of high network charges for households. As a result, year-on-year price growth in the housing, water, electricity, gas and other fuels group declined to 5.8% in March. Year-on-year growth in food and non-alcoholic beverage prices also eased (2.6%). Year-on-year growth in services prices strengthened (3.7%), driven mainly by nearly 10% higher prices of insurance and financial services. In February, Slovenian industrial producer prices remained unchanged month-on-month, while their year-on-year growth slowed to 1.5%.

In the first two months of 2026, consolidated general government balance recorded a deficit of EUR 133 million, which is EUR 112 million higher than in the same period last year. In the first two months, revenue increased by 8.8%. Year-on-year growth strengthened particularly in social contributions, reflecting the introduction of the long-term care contribution in July last year. Revenues from value added tax and EU funds (for the implementation of the Recovery and Resilience Plan) also increased significantly. By contrast, revenue from excise duties and corporate income tax was lower year-on-year. Expenditure increased by 11.2% year-on-year in the first two months, driven primarily by higher compensation of employees following the implementation of the wage reform and by increased transfers. The increase in transfers to individuals and households was mainly driven by higher expenditure on pensions, personal assistance and unemployment benefits, which were raised at the beginning of this year. Transfers to improve interregional bus connectivity also continue to increase. Investment expenditure was also higher year-on-year, particularly for the purchase of military equipment and for investment in new construction, reconstruction and renovation.