Ljubljana, 02 July (STA) - An improvement on Slovenia's labour market is not expected in the near future due to anaemic economic activity, Slovenia's central bank said on Tuesday. Coupled with a drop in real wages, household consumption is expected to remain weak, although some signs of economic revival have been registered due to a rise in exports.
The positive trends in the labour market registered in April and May were foremost the result of seasonal factors, the central bank said after a meeting of its governing board on Tuesday, responding to a slight drop in the unemployment rate in these months.
Despite this, Banka Slovenije said it had begun to register a bottoming out of the crisis in construction and also saw an increase in revenues in retail in May. Moreover, economic trends in the eurozone have begun to show signs of improvement in the second half of the second quarter.
According to the central bank, this has brought about some short-term signs of improvement in the Slovenian economy. Industrial output has not fallen for three consecutive months with the help of a rise in imports. Businesses have also been upbeat about future orders.
Still, new measures for fiscal consolidation are expected to drag out the ongoing recession into next year, when a moderate drop in GDP is expected, Banka Slovenije said in a statement. Sustainable growth is expected to return in 2015 with the help of better international conditions and the effects of the bank rescue measures.
The central bank highlighted that the supplementary budget proposed by the government increases the funds earmarked for strengthening the capital base of state-owned banks to EUR 1.2bn.
Given that all the measures for helping banks has been focused on this year, the budget deficit is expected to spike this year before receding again in 2014, when it is expected to stand at 2.6% of GDP.