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The euro area economy recovered in the first quarter, supported by net trade and private consumption, and the ECB expects growth to continue in the coming quarters. After declining in the fourth quarter of last year (-0.1%), euro area GDP grew by 0.3% at the beginning of the year (by 0.4% year-on-year). According to available indicators, similar economic growth is expected to persist into the second quarter. According to June ECB staff projections, GDP growth is expected to be 0.9% in 2024, strengthening to 1.4% in 2025 and 1.6% in 2026. Amid wage growth and rising confidence, real disposable income is expected to continue increasing, supporting private consumption, which will be the main driver of economic growth. Euro area inflation continued to fall in the first five months of the year and the ECB expects it to decline further. It therefore decided to lower the key interest rates by 25 basis points at its June meeting. The ECB forecasts HICP inflation of 2.5% this year, falling further to 2.2% in 2025 and 1.9% in 2026 as cost pressures continue to ease.

According to economic indicators, activity in manufacturing and trade improved at the beginning of the second quarter. Manufacturing output recovered in April after a significant decline in March and is now close to the level of the first two months of the year. Compared to the previous April, it was 8.2% higher. In the first four months of the year, it was similar to the same period last year. Trade in goods decreased month-on-month in April but increased year-on-year. In the first four months, exports and imports of goods remained on average lower year-on-year. Sentiment in export-oriented activities improved in May, although export orders remained at a very low level. After stagnating in the first quarter, real turnover in most trade sectors increased month-on-month in April and was also higher year-on-year. According to preliminary data, year-on-year growth of durable goods consumption continued, with turnover in the sales of motor vehicles and retail sales of non-food products rising by 22.3% and 5.6% respectively year-on-year. Total real turnover in market services continued to rise in the first quarter and was also higher year-on-year. After high growth at the beginning of last year, construction activity gradually declined amid monthly fluctuations. In the first four months, it was 3.2% lower year-on-year. Sentiment in the Slovenian economy deteriorated slightly in May compared to April, though it improved year-on-year. Compared to the same period last year, consumers are much more optimistic as inflation eases.

In May, 3,098 fewer people were unemployed than in the same period last year; amid labour shortage, wage growth remains relatively high despite slowing growth rates. The monthly decline in the number of registered unemployed in May was slightly lower than in the previous months (seasonally adjusted). Year-on-year, the total number of unemployed fell by 6.6% and the number of long-term unemployed by 14.5%, amid labour shortages. Due to a methodological change, the growth in the number of persons in employment in May was slightly higher than in the final months of last year. This growth continued to be driven by a higher number of foreigners in employment, particularly in construction, transportation and storage, and administrative and support service activities. Wage growth has moderated slightly. In March, the average gross wage was 6.4% higher year-on-year in nominal terms. In real terms, it was 2.7% higher, with a 3.5% increase in the public sector and a 1.3% increase in the private sector. In the first three months, the nominal growth of the average gross wage (7.1%) was lower than in previous quarters.

Year-on-year growth in consumer prices slowed to 2.5% in May, the lowest level since September 2021. This moderation compared to previous months was mainly due to the significantly lower growth in the prices of housing, water, electricity, and gas and other fuels (3.1%). Prices of food and non-alcoholic beverages were 0.2% lower year-on-year in May. The price increase for services is also weakening (4.1% year-on-year) but remains relatively high compared to other groups. 

In the first four months of this year, the deficit of the consolidated balance of public finances was slightly higher year-on-year. It totalled EUR 55 million, compared to EUR 44 million in the same period last year. Revenue increased by 10.8% year-on-year. In the first four months of this year, alongside the increase in revenue from social contributions due to the transformation of the complementary health contribution into a mandatory contribution, revenue from corporate income tax picked up significantly, driven by higher balancing payments of tax this year. Growth in personal income tax revenues also increased significantly and growth in non-tax revenues was also higher. Growth in revenues from excise duties was low, partly due to the dynamics of measures to mitigate the consequences of rising electricity prices. In the first four months of the year, expenditure increased by 10.9% year-on-year. This increase was driven by expenditure on salaries and wages and other personnel expenditure, the early payment of the holiday allowance, the increase in expenditure on goods and services and other healthcare expenditure in connection with the transformation of the supplementary health insurance into a mandatory contribution, and transfers to individuals and households, partly as a result of the high regular annual indexation of pensions. The contribution from investment and interest expenditure was slightly lower. From August 2023 to the end of April 2024, EUR 672.3 million had been disbursed from the state budget to rectify the consequences of floods and landslides, of which EUR 114.2 million was disbursed in the first four months of this year, most of it for ongoing maintenance and insurance under the emergency Flood Recovery Act.