Abstract

Growth of domestic consumption in September was of a seasonal nature. Dynamics of households consumption had similar characteristics as total domestic consumption. Government spending stagnated in September, while longer term dynamics strengthened. Investments in fixed assets increased, but longer term dynamics deteriorated. Export spending continues to decline; the decrease is more intense in the EU than in Slovenia, because the competitiveness of Slovenian exporters  has been steadily and significantly increasing. In the second half of the year, it exceeded pre-crisis levels and the competitiveness of exporters from other parts of the EU. Relative lag in the dynamics of labor costs compared to the dynamics of labor costs in the euro area, contributed most. Under-spending inhibits the growth of the economy, but there are large differences between sectors. In the manufacturing sector demand does not hinder economic activity, while in the service sector, a lack of demand remains the main obstacle to growth. Spending in the next few months should strengthen, but without a major acceleration.

The dynamics of foreign trade in October slowed, especially imports from non-EU countries (cheaper energy). The slowdown of trade was above average in comparison with other EU28 states.

The economic climate has been favorable in December, better than the previous month, the previous year, and above the long-term average. Confidence in the manufacturing sector was the same as the confidence a month earlier, higher than a year ago and above the long-term average. Confidence was stable in the services sector, while it decreased in construction where expectations for the next three months are mostly favorable. Confidence in the retail trade lowered even more. Economic sentiment in November compared with the same period in 2014 across the EU28 improved, while in the short-term the sentiments deteriorated.

Industrial production in the yearly comparison improved, but they shrunk in the short term. Industrial production in the EU28 and in the euro-zone in October, compared to September rose. It also rose within a year, the most in Lithuania and the Netherlands, it fell in Greece.
 
The value of finished construction works was in October slightly lower than in September and much lower than in October last year, but the impulse trend indicates a strengthening. Total number of tourist overnight stays increased in early autumn, while the trend is declining. There was an interim increase in the contribution of foreign and domestic tourists, while the impulse trend reversed in both. Air transport was also going well in October, urban road transport stagnated, transport of goods in the Port of Koper was lower in October than in October last year.

In the labor market, the situation has improved. The number of employees has been increasing, as has also the number of employees with companies. The number of job seekers in the employment offices in November compared to October decreased for almost 7 percent from a year ago. There were less newly registered jobseekers than in October, the number was dominated by those who have lost their jobs for a certain period of time. Between those who left employment institutions, there were less re-employed or self- employed.

The unemployment rate in a year declined in both the euro area and the EU, but a number of unemployed in the euro area remains high. The lowest unemployment rates are in Germany and the Czech Republic, the highest are in Greece and Spain.

In November, the cost of living increased and the pace of decline eased, core inflation continued to fall. The prices of services remained unchanged, while prices of goods increased. The majority of price increases were brought by seasonal increases in clothing and footwear prices and they were squeezed by petroleum products and fruit. Harmonized index of consumer prices in November also increased year on year, in the euro area it remained unaltered. Producer prices in November again turned down, the most prices of raw materials, while the prices of capital goods stagnated. In a longer term, the prices did not increase in any production segment and in any segment of the market. Price expectations remain subdued. World commodity prices continue to fall, oil prices the most, only prices of non-food crops rose.

In October, the average wage increased, but the increase was weaker than the seasonal dynamics; thus wages have once again turned down and the differences in wage growth between the activities have been small. Differences in the annual increases in wages among the activities were also small. In the public sector, wages increased year on year in the core government sector, while they decreased in health and education services. Stagnant wages were accompanied by similar dynamics of other components of labor costs, therefore labor costs continue to increasingly lag behind the labor costs in the euro area, which increases the competitiveness of the economy. The lag behind the euro area wages and other labor costs in the public sector is much greater, they were stagnating at a nominal level for two years, and are lower than the level at the beginning of the crisis.

In November, general government revenues were lower, the more long-term dynamics declined. In General government revenues in November brought 60 millions € more than in November 2014, the cumulative to November was already 370 million € more than last year. The November decrease was primarily due to one-off increase in October, primarily temporal shift of excise tax and value added tax from September to October as well as the very low levels in October 2014. Unfavorable surprising is more and more systematic decline in the revenues of the value added tax on imports, coinciding with the contraction of imports. Revenues on direct taxes and other revenues increased significantly mainly from income tax. However, all important forms of direct taxea and other revenues excluding the revenues of administrative bodies and fines.

In October, total credits to companies and households continued to decline. While the economy continues to grow faster than in the euro area, loans to enterprises in the euro area stagnate while in Slovenia continue to fall at the same rate as before the rehabilitation of banks. Loans to households since August accelerated in Slovenia similarly as in the euro area. Deposits were up again; corporate deposits have fallen even more and long-term dynamics of corporate deposits worsened. Increased repatriation of deposits has increased the financial independence of the business sector from the banks, Thus, the financing constraints imposed by the banks and the regulator, eased.

The policy of contracting the lending has already directly worsened even the solvency of banks; they are losing not only interest incomes but also non-interest income, which, in addition to decline in deposit interest rates is the key resource for resolving the profit and loss account. With the contraction of credits and credit related activities the banks lost one half of actually realized net result in the in the first nine months of this year. Interbank interest rates continue to slowly decrease, the borrowing rates fluctuate slightly, the deposit interest rates remain unaltered.
 
The surplus in the current balance in October decreased, but remained at high levels, cumulatively it is approaching 8% of GDP. To this more than 1.4 billion was contributed by a surplus in trade in goods and more than 1.8 billion by surplus in services, while the deficit in the accounts of primary and secondary income decreased the balance of payment surplus. In the financial account in the first nine months liabilities increased as a result of a reduction in direct investments and increase of  portfolio and other investments. Gross external debt during the year fell by almost one billion €, the share of private sector is yet a third. Net external debt in September decreased by a little less than half a billion €, it stands at about 30 per cent of GDP, the lowest since 2007. The yield on Slovenian ten-year bonds despite a small increase remained below 1.7%.