In Slovenia, the value of some indicators of economic activity declined in March and April, while construction activity remained strong; the economic climate deteriorated in May. Trade in goods continued to decline in April, which we attribute to a decline or weakening of activity in Slovenia’s main trading partners. After rising slightly in the first quarter, manufacturing output fell sharply in April. It fell year-on-year, with the largest declines in the energy-intensive paper and chemical industries. Despite a decline in April, year-on-year growth in trade in services remained strong in the first four months of the year, mainly due to a significant recovery in trade in tourism-related services. In the first quarter of this year, real turnover further increased quarter-on-quarter in most market services and was also higher year-on-year, with the exception of transportation and storage. Turnover in most trade segments was also lower year-on-year, with the exception of the sale of motor vehicles, where turnover was significantly higher year-on-year also in April, according to preliminary data. According to data on the value of construction work put in place, construction activity remains strong. In the first four months, it clearly exceeded the level of the previous year in all segments. Economic sentiment continued to decline slightly in May. Only confidence among consumers and in services showed a positive trend.

Electricity consumption in May was 12% lower year-on-year – the same decrease as in April. In our estimation, this was mainly due to lower consumption in the energy-intensive part of industry as a result of high electricity prices. The shutdown of primary aluminium production in Talum since April has also contributed to the lower consumption compared to the same period last year. Household consumption may also have contributed to lower year-on-year consumption as a result of more rational use of energy. Slovenia’s main trading partners also recorded a year-on-year decline in consumption in May (Austria and France by 12%, Italy and Germany by 5%), with the exception of Croatia, where consumption was 1% higher year-on-year.

In May, electricity consumption in the distribution network was lower year-on-year in all consumption groups. As in the previous few months, the largest decrease was seen in industrial consumption (by 9.6%), according to our estimation mainly on account of the energy-intensive part of the economy. Household consumption was also lower year-on-year in May (by 3.1%), according to our estimates due to more rational energy consumption. Small business consumption was 3.2% lower year-on-year in May.

Similar to April, gas consumption in May was slightly above the comparable average consumption of previous years. In previous months, lower gas consumption was linked to lower production in parts of the industrial sector due to high gas prices and to government measures to encourage more rational use. The relatively high consumption in recent months was also influenced by the colder temperatures, which extended the heating season. The market prices of gas, which fell below EUR 30 at the end of May and were thus lower than in the whole of last year, have prompted some companies to increase their production again, including in the steel industry, where production has been running at full capacity again since April. Slovenia has almost reached the EU target of reducing gas consumption by at least 15% between August last year and March this year (achieving a 14% reduction). In the first two months of the one-year extension of the EU regulation on reducing gas demand, gas consumption in Slovenia was even slightly higher than the comparable average consumption (by just over 1%). Under the regulation, Slovenia can exclude from the calculation the gas consumed in the new gas-steam unit of the Ljubljana heating plant, which has not yet been put into operation.

Amid high price growth, the nominal value of fiscally verified invoices in May was 7% higher year-on-year. Growth was similar to March and slightly higher than in April (when it was 5%), mainly due to 7% growth in trade, which accounted for almost 80% of the total value of fiscally verified invoices issued. Turnover increased by 5% in nominal terms in retail trade (by 2% in April), by 4% in wholesale trade (by 3% in April) and by 19% in the sale of motor vehicles (similar year-on-year growth to that in April). Partly also due to the bad weather, turnover growth in May was slightly lower than in previous months in accommodation and food services (9%; 13% in March and April), certain creative, arts, entertainment and sports services, and betting and gambling (total growth in other service activities was 12%).

Trade in goods continued to decline in April, especially imports, and was significantly lower than a year ago. Real seasonally adjusted exports of goods fell by 2.9% in April (by 3.1% to EU Member States) and imports by 7.9% (by 5.9% from EU Member States). In recent months, exports of intermediate goods have continued to decline, especially to Slovenia’s main trading partners in the EU. Imports of consumer goods declined, while imports of intermediate goods fluctuated markedly from month to month. Compared to the same period last year, both exports and imports (also to and from EU Member States) were significantly lower in the first four months of this year (by 2.9% and 7.7% respectively). The decline or weakening of activity in Slovenia’s main trading partners and the continuing uncertainty in the international environment have weighed on the sentiment in export-oriented activities in recent months, with export orders falling further in May and export expectations remaining very low.

Trade in services declined in current terms in April. Both exports and imports of services (seasonally adjusted) fell compared to previous months, mainly due to a significant decline in trade in transport and other business services. This was mainly linked to lower trade in goods and cooling of economic activity in Slovenia’s main trading partners. Trade increased markedly in tourism-related services (spending by foreign tourists, same-day visitors and transit passengers in Slovenia increased by 4.4%, while spending by Slovenian guests abroad increased by 5.7%). Among the main services, construction and ICT services also saw an increase in trade (seasonally adjusted). Despite the decline in April, the year-on-year growth in trade in services remained strong in the first four months of the year, mainly due to a significant recovery in trade in tourism-related services.

After rising slightly in the first quarter, manufacturing output fell sharply in April. It was lower than in the first quarter in all industry groups and was 7.2% lower than in April last year (working days adjusted). The sharpest decline was again seen in the paper and chemical industries, where the year-on-year decline deepened, as it did in other energy-intensive industries. Most other industries also recorded larger year-on-year declines than in the first quarter. After rising in the first quarter, the manufacture of electrical equipment and, in our estimation, the pharmaceutical industry also fell year-on-year. Manufacture of motor vehicles remained higher than a year ago. The prospects for manufacturing have continued to deteriorate in recent months. Most companies do not expect exports to pick up by the end of the summer and expectations for a pick-up in production remain subdued.

According to data on the value of construction work put in place, construction activity remains strong. After increasing at the beginning of this year, the value of construction put in place fell in April, while it is still significantly higher than in April last year (by 23%). In the first four months, activity was 24% higher than last year, with a similar growth in all three segments covered by the statistics: construction of buildings, civil engineering and specialised construction activities. 
However, some other data suggest significantly lower growth in construction activity. According to VAT data, the activity of construction companies in April was 12% higher than last year. Based on data on the value of construction put in place, the difference in the growth of activity was 11 p.p. Data on the value of industrial production in two activities traditionally strongly linked to construction also do not point to such high growth: production in other mining and quarrying was 7% lower in April than in the same month of 2022, while it was 18% lower in the manufacture of other non-metallic mineral products. 
 

Turnover in the sale of motor vehicles was higher year-on-year in the first quarter and, according to preliminary data, also in April, while it was lower in wholesale and retail trade. Turnover in the sale of motor vehicles, which has been recovering in current terms since the second half of last year, increased by 15.7% year-on-year. In current terms (after a strong increase in January and a decline in February and March), turnover in wholesale trade also recovered, but it remained 3% lower than a year ago. Turnover in retail trade continued to decline and was also lower year-on-year (by 5.7% in the sale of food, beverages and tobacco and by 4% in the sale of non-food products). According to preliminary SURS data, turnover in April was also lower year-on-year in retail trade and significantly higher in the sale of motor vehicles. 

Real turnover in market services rose in the first quarter of this year. After a decline in the second half of last year, total turnover in market services increased by 3.2% in current terms compared to the fourth quarter of last year. Growth accelerated in professional and technical activities, with continued strong sales growth in architectural and engineering services related to strong construction activity. Turnover growth in administrative and support service activities slowed despite a recovery of growth in employment services, while turnover in travel agencies exceeded pre-epidemic (Q1 2019) levels for the first time. Similarly, growth in accommodation and food service activities slowed after rising sharply in previous quarters. Turnover in information and communication activities increased again, this time mainly due to strong turnover growth in computer services. On the other hand, turnover in transportation and storage declined for the third quarter in a row, especially in warehousing and storage. In the first quarter of this year, total turnover was 6.7% higher in real terms year-on-year. It was also higher in most market service activities, with the exception of transportation and storage. Only turnover in administrative and support service activities and employment agencies was still below pre-epidemic (Q1 2019) levels, in the latter by 29%.

Compared to the same period last year, households again spent more on cars and less on food, non-food products and overnight stays in Slovenia in April. Sales of passenger cars, which had fallen sharply until the middle of last year due to supply chain disruptions, rebounded in April, rising by almost one-tenth year-on-year. Purchases of food, beverages and tobacco and non-food products fell even more markedly year-on-year than in the first quarter (by 8% and 6% respectively). The number of overnight stays by domestic tourists in Slovenia was also lower than a year ago (by 22%).

The value of the economic sentiment indicator fell further slightly in May (by 0.2 p.p.) and was also lower year-on-year (by 5.5 p.p.). Compared to the previous month, the confidence indicators in manufacturing, retail trade and construction had a negative impact, while indicators among consumers and in services had a positive impact. Compared to May last year, only consumer confidence was higher. Manufacturing and construction businesses report a deterioration in the overall order books indicator related to the uncertain economic situation and weak foreign demand. The stock of finished products indicator in manufacturing and the sales indicator in retail trade worsened. In construction, confidence declined due to weaker employment expectations. 

The financial situation of households deteriorated slightly in May for the second month in a row. At the same time, the proportion of households in the lowest income quartile facing financial distress did not increase significantly. This, according to our estimate, was mainly due to the increase in the minimum wage and measures taken by the Government to mitigate the impact of rising prices on the most vulnerable population groups. The financial situation of households in the second and third income quartiles deteriorated slightly. The share of households facing financial distress, having to draw on savings to meet their needs has increased, while the share of households running into debt has slightly decreased as interest rates have risen. The share of households facing financial distress increased by 0.5 p.p. year-on-year.

Year-on-year growth in the number of persons in employment was slightly lower in April than in previous months (1.6%). This was mainly due to the year-on-year decrease in the number of civil servants. The strongest year-on-year growth was still seen in construction, which is facing a major labour shortage and saw the largest increase in the number of people in employment compared to the start of 2019. Employment of foreign workers has been the largest contributor to the overall growth in the number of persons in employment for some time – their contribution was 87% year-on-year in April, slightly higher than in previous months. Foreigners accounted for 14.3% of total employment, up 1.2 p.p. from last year. The sectors with the highest share of foreigners were construction (48%), transportation and storage (32%), and administrative and support service activities (26%).

According to the seasonally adjusted data, the monthly decline in the number of registered unemployed was similar in May (-1.3%) as in previous months. According to original data, 47,186 people were unemployed at the end of May, 2.9% less than at the end of April. Unemployment was down 15.5% year-on-year. Amid a severe labour shortage, the numbers of long-term unemployed and unemployed over 50 also decreased (by 27.2% and 15.7% respectively). 

After two months of growth, the average gross wage fell by 1.2% year-on-year in real terms in March. This was mainly due to the slightly higher March 2022 base and the year-on-year increase in inflation. In the private sector, the average gross wage fell by 1% in real terms year-on-year. Growth was strongest in accommodation and food service activities, a sector which is facing a major labour shortage. Gross wage in the public sector also fell slightly year-on-year in real terms (by 1.5%). Compared to March last year, the average gross wage increased by 9.2% in nominal terms – by 8.8% in the public sector and by 9.4% in the private sector. In the first quarter, year-on-year growth was modest in real terms (0.5% – 1% growth in the private sector and a 1.4% decline in the public sector).

According to the survey data, unemployment fell year-on-year in the first quarter of this year and the number of persons in employment also declined. According to original data, 38 thousand persons were unemployed, which is 13.6% less than in the same period last year. The survey unemployment rate (3.8%) fell by 0.5 p.p. year-on-year. According to the survey data, the slowdown in economic activity also led to a slight decline in the number of persons in employment in the first quarter, when the volume of student work in particular was lower year-on-year. 

In April, the numbers of financial social assistance (FSA) beneficiaries and unemployment benefit (UB) recipients were lower than in previous months. The number of FSA beneficiaries has been declining since mid-2021, mainly due to an improvement in the labour market situation. It reached the lowest level in October 2022, after which it rose again due to a temporary government measure to ease the rising cost of living for the most vulnerable, expanding the group FSA beneficiaries. Since February this year, it has been declining again. In April, 77,216 people were entitled to FSA, which is about one-tenth less than in April 2022. The number of UB recipients was also lower year-on-year, by 8.8% (13,395 people). After a seasonal increase in the number of UB recipients in January, which was related to a higher inflow into unemployment due to expiry of fixed-term employment contracts, their number has declined for the third month in a row.

Year-on-year growth in consumer prices slowed further in May to 8.4%, the lowest level in 12 months. The biggest impact on the moderation of year-on-year inflation came from lower year-on-year price increases in transport (0.5%) and housing, water, electricity, gas and other fuels (10.6%), which we estimate was mainly due to the higher base from last May, when energy prices had increased by almost 8% month-on-month. The year-on-year increase in food prices also slowed slightly in May (from 15.6% to 14.7%), contributing 2.3 p.p. to inflation. The year-on-year increase in durable goods prices continues to gradually weaken (4.9%). After rising in the previous two months, the increase in semi-durable goods prices also slowed in May (to 5.5%). This time the main contribution to inflation came from the prices of services (2.7 p.p.). Their growth strengthened further (from 7.9% to 8.3%). In our estimation, higher prices in recreation and culture and refuse collection contributed significantly to the higher growth.

After about two and a half years of uninterrupted growth, Slovenian industrial producer prices fell month-on-month in April (by 0.4%); the year-on-year growth thus continues to slow rapidly. Prices of products fell month-on-month in almost all industrial groups, with the exception of non-durable consumer goods, where prices rose by 0.5%. Prices on foreign markets fell for the second month in a row (this time by 0.9%), while prices on the domestic market were only marginally higher (by 0.1%) due to the increase in consumer goods prices. Against the backdrop of the monthly decline in prices and the high base from last year, the year-on-year price increase for Slovenian producer prices slowed significantly (from 13.4% in March), but it still reached 9.9%. Growth was lower on both the domestic (by 13.3%) and foreign markets (by 6.4%). Year-on-year product price growth is slowing in all product groups and remains highest in the energy group (36.1%). In the intermediate goods group, year-on-year price growth fell to 6.5%.

The volume of loans to domestic non-banking sectors increased slightly in April (by 1%) after two months of decline, while year-on-year growth remained largely unchanged (at 2.5%). The monthly increase was due to higher corporate and NFI borrowing, but the year-on-year growth remained at around 1%. The volume of household loans increased by EUR 14 million in April, which is one-fifth of the average monthly increase last year. This year, the volume of consumer loans in particular is increasing, while the volume of housing loans is stagnating. Data on new lending show that borrowing of non-financial corporations fell by around 15% in the first four months of this year, while borrowing of households fell by more than a quarter, with borrowing in the form of housing loans more than halving. Year-on-year growth in domestic non-banking sector deposits fell slightly in April (5.5%). In view of the high inflation and the still low deposit interest rates, household deposits in banks have fallen slightly in the last two months, but they still increased by 6.2% year-on-year. The quality of banks’ assets remains solid and the share of non-performing loans is still only slightly above 1%.

The surplus of the current account of the balance of payments increased again in April, mainly due to the trends in trade in goods. The trade surplus widened in April, as imports fell more than exports. The 12-month current account surplus was also higher than a year earlier, amounting to EUR 1,066.4 million (1.6% of estimated GDP). The year-on-year increase was mainly due to a higher surplus in services trade, especially in trade in travel and transportation services. Growth in the surplus in services trade was also driven by trade in higher value-added services (financial services, telecommunications, computer and information services, and research and development services). The primary income deficit was lower mainly due to lower payments of dividends and profits to foreign investors and partly to higher subsidies for the agricultural and fisheries policy from the EU budget. Although the trade balance is improving this year, the 12-month trade deficit was higher than last year. The secondary income deficit was also higher, due to lower government sector transfers from abroad (funds for current international cooperation from the EU budget).

The consolidated general government budgetary accounts showed a deficit in the first four months of this year. It totalled EUR 44.6 million, compared with EUR 145.4 billion in the same period last year. Revenues increased by 3.7% year-on-year (last year they increased by 14.3% due to a stronger recovery and one-off income). Revenue growth was 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 compared to the first four months of last year, due to an increase in excise duty on energy products. Overall tax revenue growth remained modest, due to reductions in other tax burdens to mitigate the impact of the energy crisis (VAT and environmental tax on CO₂ emissions) and legislative changes in personal income tax. Receipts from the EU budget were considerably lower, after a sharp rise last year related to the disbursement of part of the advance payment from the Recovery and Resilience Facility, as was some non-tax revenue. Revenues increased by 2.3% year-on-year, while they decreased by 0.9% in the same period last year. The main reason for the increase this year was the rise in wages and other labour costs affected by the agreement on wage increases in the public sector. Various transfers (subsidies and transfers to individuals and households), which had fallen in the same period last year due to the lifting of COVID-19 measures, have also risen this year due to measures to mitigate the impact of rising energy prices. Measures to mitigate the consequences of COVID-19 amounted to EUR 79.5 million in the first four months of this year (compared to EUR 386.3 million in the same period last year), while measures to mitigate price increases amounted to EUR 169.1 million. The latter include mainly subsidies to the economy under Article 14 of the ZPGOPEK (EUR 103.6 million). Growth of investment expenditures was similar to that last year.

Slovenia’s net budgetary position against the EU budget was positive in the first four months of this year (at EUR 177.1 million). In this period, Slovenia received EUR 390.8 million from the EU budget (22.2% of receipts envisaged in the state budget for 2023) and paid EUR 213.7 million into it (32.7% of planned payments). The bulk of receipts were resources under the Common Agricultural and Fisheries Policy (34.4% of all reimbursements to the state budget, 39.3% of the planned reimbursements in 2023) and resources from structural funds (34.0% of all reimbursements to the state budget, 23.1% of the planned reimbursements in 2023). Reimbursements from the Cohesion Fund amounted to 15.5% of all reimbursements in the current year (17.2% of the planned reimbursements in 2023). In April, Slovenia received EUR 49.7 million on the basis its first payment request for a grant from the Recovery and Resilience Facility, which is slightly less than 13% of the expected budget receipts in 2023. The highest payments into the EU budget came from GNI-based payments (52.7% of all payments). According to MKRR data, by the end of April this year, 87% of the appropriations under the MFF 2014–2020 (94.7% from the European Cohesion Funds and 36.0% from React-EU) had been disbursed to beneficiaries.