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According to the available indicators for the euro area, there are no signs of a visible recovery in economic activity in the second quarter. Year-on-year GDP growth in the euro area was only 1% in the first quarter and was significantly affected by the economic situation in Germany. Growth in the euro area also seems to have remained low in the second quarter, as various economic indicators do not point to a visible recovery in economic activity in the second quarter. 

Most of the available economic indicators in Slovenia deteriorated in the second quarter. Manufacturing output rebounded strongly in May after contracting in April, but it remained below the first quarter level on average in the second quarter. Trade in goods continued to decline in May and remained lower year-on-year. This was mainly due to a further decline in imports of goods, while real exports of goods rose slightly again after months of decline, mainly due to an increase in exports to non-EU countries. Exports to EU Member States, where Slovenia’s market share increased year-on-year in the first quarter after a two-year decline, remained at a similar level as in April. Expectations for export orders in Slovenia’s main trading partners fell further in June, to the lowest level since August 2020, which does not point to a visible recovery in export activity in June. Real turnover in market services fell significantly in April and was also lower year-on-year. Real turnover in retail trade excluding fuel rose slightly month-on-month in April but remained significantly lower year-on-year. Households spent less on food, non-food products and overnight stays at home in April and May than a year earlier, but more on cars and travel abroad. According to data on the fiscal verification of invoices, total real turnover in the second quarter was lower year-on-year for the first time in two years. Construction activity, which increased in May after falling in April, remained significantly higher also year-on-year. Only among consumers and in retail trade did economic sentiment rise in the second quarter compared to the previous one, while all components of the sentiment index deteriorated compared to the second quarter of last year.

The number of registered unemployed was at an all-time low in June; the average gross wage was slightly lower year-on-year in real terms in April; in the first four months, growth was modest at 0.2%. At the end of June, unemployment totalled 46,178, which is 14.3% less than a year ago. Amid severe labour shortages, the number of long-term unemployed fell by one-quarter year-on-year and the number of unemployed people over 50 by 14.5%. Year-on-year growth in the number of persons in employment in April was slightly lower than in the previous months, with employment of foreign citizens continuing to be the main contributor to growth. In April, the average gross wage in the private sector fell by 1.4% year-on-year in real terms, while in the public sector it rose by 1.6% in real terms, mainly due to the wage increase agreed last year.

Year-on-year growth in consumer prices slowed significantly in June, as expected, although the VAT on certain energy products returned to its previous higher rate. At 6.9%, it was 1.5 p.p. lower than in May and the lowest since April last year. It exceeded inflation in the euro area, as measured by the HICP (5.5%), by 1.1 p.p. The year-on-year decline in inflation was mainly due to a much lower increase in the prices of housing, water, electricity, and gas and other fuels, on a higher base due to the expiry last year of the measure introducing an exemption from the payment of certain levies and charges on electricity, although the VAT on energy returned to its previous higher rate. Year-on-year growth in food prices was still relatively high at 12.1%, but has gradually moderated. However, the year-on-year growth in prices of goods and services in the health sector has accelerated sharply in recent months and at 13.3% in June was the highest among all groups of goods and services. Core inflation, i.e. price growth excluding energy and food remained at a relatively high level (8%) in June and has not yet started to fall. Slovenian industrial producer prices fell month-on-month for the second time in a row in May, while year-on-year growth slowed noticeably on last year’s high base, reaching the lowest level since July 2021. 

In the first five months of this year, the deficit of the consolidated balance of public finances was higher year-on-year, as revenue growth lagged behind expenditure growth. It totalled EUR 172 million, compared with EUR 58 million in the same period last year. Revenues increased by 2.3% year-on-year. Amid reductions in certain tax burdens to mitigate the consequences of the energy crisis, legislative changes in personal income tax and moderation of growth in private consumption, growth in tax revenues slowed significantly, especially in VAT revenues. Growth was also lower due to lower balancing payments of corporate income tax. EU funds received were considerably lower despite the payment on the basis of the first request for a grant from the RRP in April and certain capital and transferred revenues. Revenue growth was thus mainly driven by the growth in social contributions in the context of continuing employment growth and accelerated wage growth. Growth in excise revenue has also accelerated significantly this year, due to higher excise duties on energy and tobacco products. Expenditure increased by 3.5% year-on-year. The main reason for the increase was the rise in wages and other remunerations as a result of the agreement on public sector wage increase. Various transfers were also higher year-on-year, as some COVID-19 measures had already been lifted this time last year and because of measures to mitigate the consequences of rising energy prices. Growth of investments (11.7%) also made a significant contribution to the growth of total expenditure.