News

According to the forecasts by the EC and the OECD, euro area economic activity will drop slightly this year and increase in 2014. In the third quarter GDP remained down year-on-year, despite a further modest quarterly increase (0.1%, seasonally adjusted). The EC and OECD project euro area GDP to decline slightly again (-0.4%) this year and to increase by around 1.0% in 2014 due to stronger external and domestic demand in response to the expected improvement in business and consumer confidence, slower fiscal consolidation and low inflation. Economic growth will continue to be constrained by corporate and household deleveraging, financial market fragmentation and high unemployment. Both institutions regard the completion of the banking union and a further implementation of structural reforms as the top priorities of the euro area.

Slovenia’s GDP remained unchanged in the third quarter (seasonally adjusted). The smaller year-on-year fall in GDP (-0.6%) than in previous quarters was mostly due to the positive contribution of changes in inventories. The contribution of net exports remained unchanged, as amid a higher growth in exports relative to the same period last year, imports also increased year-on-year for the first time after the first quarter. The year-on-year declines in household and government final consumption and in investment activity deepened, which indicates a continuation of the adverse situation in the domestic environment. Value added remained down year-on-year in most sectors.

The labour market situation is easing, but remains tight. After still dropping at the beginning of the year, employment has remained unchanged since the middle of the year, while registered unemployment, which rose sharply in the first half of the year, has stopped rising in the last few months. An average of 119,460 persons were registered as unemployed in the first ten months, more than in the same period last year (9.3%), which is mainly due to a higher number of first-time jobseekers and persons who registered as unemployed because of the termination of their fixed-term employment contracts. On the other hand, more persons found work than in the same period last year, primarily due to a greater involvement of the government in the implementation of active employment-policy schemes, fewer breaches of regulations and fewer retirements. The average gross earnings in the first nine months were lower than in the same period of last year due to a decline in the general government sector. In the private sector they were roughly the same as a year earlier.

Consumer prices fell in November, while year-on-year inflation remained unchanged. Monthly deflation was mainly marked by lower prices of liquid fuels and unprocessed food. Year-on-year inflation remained at previous month’s level in Slovenia (1.3%), while rising slightly in the euro area, according to Eurostat’s flash estimate.

The problems in the Slovenian banking system are deepening. The stock of loans to domestic non-banking sectors shrank by EUR 1.7 bn in the first ten months. Households are deleveraging this year, and the stock of government loans also declined after last year’s growth. Enterprises and NFIs continue to repay domestic bank loans, while borrowing abroad this year, mainly in the form of long-term loans. Banks are repaying liabilities abroad, with net repayments totalling EUR 1.7 bn in the first nine months. The quality of banks’ assets keeps deteriorating. The proportion of bad claims, having reached 17.5% of the banking system’s total exposure in September, rose by EUR 1.4 bn in the first three quarters, more than in the entire year 2012.

The consolidated balance of public finance recorded a deficit of EUR 1.3 bn in the first nine months. Revenue (EUR 10.6 bn) was down 2.4% in the first nine months, while expenditure (EUR 12.0 bn) was down 0.2%. Tax revenue remained lower than in the same period last year, particularly revenue from corporate income tax. Among expenditure categories, expenditure on wages, goods and services and social transfers (except pensions) declined in particular. The deficit was up EUR 234 m year-on-year. Since July the deficit has not been growing year-on-year, which can be explained by a smaller year-on-year drop in revenue, mainly on account of higher VAT revenue in the last three months.