Ljubljana, 07 March (STA) - After the Slovenian economy contracted in the final quarter of 2011, the situation on the labour and financial markets remains harsh this year as well, the government Institute of Macroeconomic Analysis and Development (IMAD) says in the latest issue of The Economic Mirror.
Economic activity in the eurozone declined by 0.3% in the final quarter of 2011, while it increased by 0.7% year-on-year, says the report released on Wednesday.
As the situation on the financial markets, at companies and in households continues to deteriorate, the European Commission has downgraded the economic outlook for this year, projecting a 0.3% contraction of GDP.
If the financial and debt crisis further deepens and oil prices continue to go up, the drop in GDP might be even bigger.
In Slovenia, GDP further contracted in Q4 of 2011 due to a drop in domestic spending. At the annual level, the economy shrunk at a rate of 0.2%.
The situation on the labour market remains tough, as the number of working population decreased also in the final quarter of 2011. "On average, the number of workers decreased the most in construction and market services, while the decrease in manufacturing was not as drastic as in the past two years," IMAD says.
On the other hand, the number of employed went up the most in agriculture, education, technical and scientific activities, in health and in social security. At the end of February 115,036 people were registered as unemployed.
The 2% rise in the average gross wage in 2011 is a result of pay rises in the private sector, as wages in the public sector have been frozen for the third year in a row, IMAD says. The bonuses paid out at the end of the year were the lowest in the last six years.
The loan activity of banks slightly enhanced in January, but the credit crunch has not eased much, according to IMAD. Net credit flow to Slovenian companies amounted to EUR 55.2m in January.
"We estimate that after a massive deleveraging at the end of last year, companies partly compensated for the repayed loans with new ones. This was enabled by better liquidity of the banking system, which was aided by the ECB."
In 2011, the net repayments of companies' loans at home and abroad doubled to almost EUR 800m. At the end of December, banks had a total of EUR 5.5bn of bad claims, which is 11.2% of all claims in the banking sector.
In January, provisions and impairments amounted to EUR 30.8m, which is a 15% decrease from January 2011.