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Economic growth in the euro area strengthened slightly in the first quarter; amid high uncertainty regarding global trade policy, the IMF revised down its forecast for global economic growth. Following 0.2% growth in the fourth quarter of last year, euro area GDP increased by 0.3% quarter-on-quarter in the first quarter of this year (1.2% year-on-year). The increase in GDP in Ireland contributed significantly to the higher growth, with all of Slovenia’s key trading partners recording positive quarterly growth. According to international analysts, this was positively influenced by the growth in domestic consumption and, to some extent, by the acceleration of production and inventory accumulation ahead of the introduction of tariff measures. At the beginning of the second quarter, economic sentiment indicators for the euro area presented a mixed picture amid heightened uncertainty regarding tariffs and a possible tightening of trade policies. In April, the IMF revised its global growth forecast downward. In its reference scenario, it projected global growth of 2.8% for this year (0.5 p.p. lower than in the January forecast) and 3.0% for next year (0.3 p.p. lower). The IMF revised its growth forecast for the euro area – where the impact of tariffs is expected to be relatively smaller – down by 0.2 p.p. for both this year and next, to 0.8% and 1.2%, respectively. Growth is expected to be supported primarily by private consumption, driven by rising real wages and expansionary fiscal policy. The realisation of these forecasts is subject to exceptionally high uncertainty, particularly regarding US trade policy.

In the first quarter of this year, economic activity in Slovenia declined by 0.8% (quarter-on-quarter, seasonally adjusted); compared to the same period last year, GDP was 0.7% lower in real terms. Investment activity continued to decline in the first quarter: total gross fixed capital formation was 5.1% lower year-on-year. Construction investment declined sharply, most notably in civil engineering. Activity in the export sector was also lower than last year, which is attributed to increased uncertainty in the international economic environment in anticipation of US tariff measures. As a result, value added in manufacturing was down compared to a year earlier (-2.5%), and exports of goods and services declined slightly on a quarterly basis, while remaining broadly unchanged year-on-year (0.1%). In an environment of uncertainty, the contribution of inventories to economic growth was strongly positive (1.1 p.p.). Despite relatively strong real wage growth and high employment levels, the growth of private consumption was rather modest (0.4%). This indicated a degree of household caution in spending, with the savings rate estimated to have increased slightly further, as also reflected in the decline in consumer confidence observed in the early months of the year. The relatively modest growth of private consumption in the first quarter was likely also affected by the different timing of the Easter holidays and related purchases (in 2024, Easter fell in March, while in 2025 it fell in April). Government consumption rose by 2.6%, driven primarily by increased expenditure on goods and services in healthcare and higher social transfers in kind, particularly spending on medical goods and health services.

Following a decline at the end of last year, the number of persons in employment remained broadly stable in the first three months of this year, while the number of unemployed persons decreased slightly in March (both seasonally adjusted). Year-on-year wage growth remained relatively high in February. In the current economic conditions, the number of persons in employment is stagnating at a high level. Year-on-year, the number of persons in employment was 0.4% lower in the first three months. The year-on-year nominal growth of the average gross wage was again higher in February (6.6%) than at the end of last year, primarily due to stronger growth in the public sector (10.6%) following the implementation of the new wage system. In the private sector, year-on-year growth moderated somewhat (4.4%), which may be related to reduced labour market pressures and also to a smaller increase in the minimum wage compared to last year, when inflation eased. The number of unemployed persons declined slightly in April (-0.5%, seasonally adjusted) and was 1.9% lower year-on-year. The more modest annual decline compared to previous months was influenced by a slightly higher inflow of redundant workers into unemployment, alongside a still moderate outflow from the unemployment register.

Consumer prices were 2.3% higher year-on-year in April, marking the highest increase since May 2024. The largest contribution came from higher prices of food and non-alcoholic beverages (5.9% year-on-year), due to monthly increases in vegetable and meat prices, and a lower base in April last year, when prices in this category declined on a monthly basis. Inflation was also pushed up by an above-average seasonal increase in footwear prices (which rose by 20% on a monthly basis). Year-on-year growth in Slovenian industrial producer prices edged up slightly in March (to 1.2%). Prices on the domestic market increased by 0.9% and prices on foreign markets by 1.5%. The highest year-on-year price growth continues to be recorded in consumer goods, with the overall rate remaining close to 3% in March. Prices in the energy group, despite a notable monthly increase, remained 1.8% lower year-on-year. Prices of intermediate goods and capital goods rose slightly.

The deficit of the consolidated general government budget stood at EUR 567 million in the first quarter of this year, nearly EUR 200 million higher than in the same period last year. Revenue increased by 6.4% year-on-year, mainly driven by tax revenue, particularly corporate income tax and value added tax, while the growth of personal income tax revenue was modest this year due to the adjustment of the income tax brackets and tax reliefs. Social contributions also contributed significantly to revenue growth. Total receipts from the EU budget were lower year-on-year. Expenditure in the first quarter was 9.1% higher year-on-year. The bulk of the expenditure increase stemmed from interest payments, current transfers to individuals and households and other current transfers (agricultural subsidies). Investment expenditure was slightly lower year-on-year. The growth of expenditure on wages was relatively modest in the first quarter despite the implementation of the wage reform, due to a base effect related to the early payment of the holiday allowance in March last year.