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Slovenian Economy Expands by 1.7% Y/Y in Q3 (III)

Ljubljana, 30 November (STA) - Slovenia's economy expanded at an annual rate of 1.7% in the the third quarter on the back of continuing export growth, the Statistics Office said on Tuesday. Quarterly growth adjusted for season and working days stood at 0.3%, down from 1.1% in the second quarter.

The annual growth rate in the third quarter slowed from 2.2% a quarter ago, when Slovenia emerged from recession after six consecutive quarters of negative growth.

"The pace of growth has been losing strength since early in the second quarter, which means that growth in the third quarter was more or less symbolic," head of national accounts at the Statistics Office Karmen Hren told the press.

But the news of slowing growth has not caused alarm among policy-makers, with both Finance Minister Franc Krizanic and the Institute of Macroeconomic Analyses and Development (IMAD) saying it was to be expected.

Krizanic said that the data are comparable to an average in the EU, where the main problem continues to be lagging investment spending.

According to the Statistics Office, exports were again the driving force of growth, rising by as much as 10.5% compared to the third quarter last year.

But Hren pointed out that "exports are the only contributor to growth, with other elements being either neutral or negative."

Investment spending fell by as much as 9.3% compared to last year, marking the eighth consecutive quarter of contraction.

Spending in the construction sector continued to contract by as much as 15% per quarter, with investment in housing down by 25% on the same period last year.

"There is no sign of an upturn in construction at the moment," Hren said.

On the other hand, there was some positive movement in investment in equipment, plant and machinery, which rose by 1% in the third quarter.

"This was expected, as the recovery in spending on equipment and machinery is usually quicker than in building and structures."

Additionally, growth was slowed by continuing contraction in total consumption, which was down 0.2%.

"This basically represents stagnation," said Hren, explaining that household spending was down by 0.5%, while government spending was virtually unchanged.

IMAD, the government's macroeconomic think-tank, said that domestic consumption remained the main hurdle to quicker growth.

It reiterated that "conditions on financial markets were increasingly important in limiting investment activity".

Krizanic meanwhile expects economic growth to persist despite the third-quarter cooling. He believes that exports will continue to be the main engine of growth.

The only danger for growth is the value of the euro against other foreign currencies and savings in countries that represent important markets for Slovenia, he told the STA.

"If the optimism has returned in sufficient quantity and if investments - including private - continue to grow in key eurozone countries, we are well on the way to recovery."

Meanwhile, data from the Statistics Office show that import growth slowed in the third quarter, standing at 5% year-on-year, which is nearly 50% less than in the previous quarter.

Through the first three quarters of this year, Slovenia's economy expanded by 0.9% when compared to the same period last year.

Hren stressed that Slovenia is therefore on track to achieve the forecast economic growth of 1% for the year.

But she added that this was not yet having an effect on employment. "The question is when growth will pull up employment. There is no significant positive outlook in this respect for the next year, 18 months."

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