News

In the second quarter, economic growth in the euro area exceeded  projections, but judging from the movement of sentiment indicators, this growth is not set to continue in the second half of the year. Real GDP in the euro area increased by 1.0% in the second quarter (seasonally adjusted) and was up 1.9% y-o-y. Growth was higher than expected particularly in Germany  2.2% q-o-q), while the recovery in countries which the sovereign debt crisis hit hardest was slower, as expected. A further tightening of financial conditions in the second quarter, winding down of the stimulus and the announced fiscal  usterity measures have contributed to a decline in the values of indicators of expectations in recent months, which suggest that this growth is not set to  ontinue in the second half of the year.

Slovenia’s real GDP was up 2.2% y-o-y in the second quarter due to stronger export demand and the contribution of change in inventories, and was, for the first time since the onset of the crisis, also noticeably higher than in the previous quarter (1.1%, seasonally adjusted). Reflecting a faster-than-expected economic recovery in Slovenia’s main trading partners and a consequent boost in export demand, total exports were up 11.4% and imports 10.2% y-o-y.  Domestic demand, on the other hand, remained subdued, and its modest y-o-y growth is attributable to changes in inventories (2.8 p.p.). Private consumption and gross fixed capital formation dropped y-o-y, while government consumption enjoyed modest growth. The y-o-y decline in gross fixed capital formation otherwise slowed further, reflecting the gap between the movements of construction investments, which remained much lower y-o-y, and investments in machinery and equipment, which recorded y-o-y growth. That export demand and domestic demand continue to recover at different speeds is also reflected in results by individual activities. The greatest value added growth was thus recorded in manufacturing industries and in transport, storage and communications, i.e. activities related to the uptick in export demand, while value added continued to plummet in construction, which fell to the lowest level since the beginning of the crisis. Value added was also down y-o-y in financial intermediation. In other market services, it was somewhat higher than a year before. In public services, growth in value added continued and even accelerated.

The number of employed persons saw relatively small changes from February to June, while the number of registered unemployed increased once again in August after a period of stagnation, climbing to 99,032 by the end of the month. The number of employed persons has stagnated since January this year, seasonally adjusted, while its decline rates have been slowing steadily y-o-y given last year’s significant job losses and this year’s stagnation. In the first half of the year as a whole, employment was nevertheless still 3.2% lower than in the same period of last year. The number of registered unemployed increased further in July and particularly in August, after 1.9% growth in the second quarter (seasonally adjusted).

Y-o-y growth in the average gross wage strengthened in June, averaging 4.3% in the second quarter. In June, the average gross wage increased by 1.1% in nominal terms, as a result of a higher average wage in the private sector, while in the public sector, the average wage dropped slightly. In the second quarter as a whole, the average gross wage in the private sector recorded 5.8% y-o-y growth, largely owing to the surge in March due to the substantial rise in the minimum wage and the still-ongoing structural effect. The average wage in the public sector declined by 0.3%, after growing strongly in 2009 and 2008.

Consumer prices rose by 0.3% in August and y-o-y inflation was at 2.3%. In the first eight months of this year, price rises largely reflected higher energy prices (a contribution of 1.4 p.p.) and the increase in excise duties (0.8 p.p.)
In the euro area as a whole, y-o-y inflation was 1.6% in August.

In the first seven months of this year, the net flow of loans was higher than in the same period of 2009 largely on account of housing borrowing by households. Domestic banks recorded net lending of EUR 866.5
m in the first seven months, nearly one fifth more than in the same period of last year. The bulk of this year’s net flows was attributable to household borrowing, the government net repaid its loans and total net corporate and
NFI borrowing (at home and abroad) was even lower than in the same period of 2009. Looking at the sources of finance, banks registered net inflows from abroad in June for the second consecutive month, while government and
household deposits, on the other side, posted a net outflow in July.

In the first half of 2010, consolidated general government revenue totalled EUR 6.8 bn and expenditure EUR 8.2 bn, with the deficit climbing to EUR 1.4 bn. Revenue was down 0.6% y-o-y (after last year’s 7.4% drop),expenditure posted 2.7% y-o-y growth (last year 10.6%). In terms of economic structure of expenditure, all categories of general government expenditure were higher y-o-y, particularly expenditure on interest payments, which was up by nearly one third, while transfers to individuals and households rose by 4.9%. The state budget realised a net surplus of EUR 37.8 m against the EU budget in the first seven months of this year, with absorption representing 27.7% of what was planned for 2010.