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Govt Think-Tank Projects 0.9% Economic Growth for 2010

Ljubljana, 16 September (STA) - The Institute of Macroeconomic Analysis and Development (IMAD) has projected a 0.9% economic growth for Slovenia for 2010. While the impulses for growth come mainly from abroad, the domestic environment remains weak, primarily because of the situation in construction and labour market trends.

According to the autumn report of the government economic think-tank, a faster-than-expected recovery of the economic activity in Slovenia's trade partners has a favourable influence on the country's export-oriented activities.

The report, which the government discussed on Thursday, adds that the highest growth will be recorded in manufacturing, transport, warehousing and communications.

Total domestic spending is to remain level, while public spending is expected to increase by 0.7%.

Following a considerable drop in spending last year, change in stocks will make the only significant contribution to the growth of GDP this year, while household spending is to drop by 0.5%.

The volume of investments in construction is projected to drop by a further 3.5%, "although investments in equipment and machinery have been on the increase since the second half of 2009", IMAD director Bostjan Vasle said.

The structure of this year's growth, which is largely based on exports and investments in equipment and machinery, also reflects on the growth of imports, which will stand at 5.6% this year, according to the report. Exports are expected to increase by 7%.

The number of registered unemployed people is expected to increase in the autumn months and the annual average will stand at 101,000. The average unemployment rate in 2010 will amount to 10.7%, while Labour Force Survey unemployment will stand at 7.2%.

The nominal growth of wages in the public sector will stand at 0.8%, while the private sector will see an increase of 4.5% compared to the last year.

Inflation, which was boosted this year by higher energy prices and excise duties, will according to IMAD reach 2.8% by the end of the year.

In 2011 economic growth is expected to jump to 2.5% and the growth of exports to stand at 5.9%. The growth is projected to be boosted to 3.1% in 2012.

Following two years of contraction, IMAD expects the construction sector to expand in 2011, primarily in the construction of non-residential buildings and railway infrastructure. The growth of investments in fixed assets is expected to stand at 4%.

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