• Velimir Bole
  • France Križanič
  • Jože Mencinger
  • Franjo Štiblar

Are we facing recession?

Gospodarska gibanja 501

Expected spending is only slowly decreasing; October saw a significant increase, which was not only seasonal, as the year-on-year growth rate doubled; the increase was general, and especially the sharpening of already rapidly growing investments was particularly strong. Exports also accelerated strongly in October, as total exports increased by more than 10% year-on-year, while exports outside the EU increased by more than 7%. After a rather widespread opinion, the economy has cooled since the last quarter of 2017; while current growth in Slovenia remains three times higher than in the euro area. The biggest drop, which pushed GDP downward, comes from the spending of the government, and slow  growth is reflected by the fluctuating spending of households and export demand. There is no slowdown in investments, neither in Slovenia nor in the euro area.

It is quite different with the expectations of spending both in manufacturing and in services. Total expected demand in manufacturing, both in Slovenia and in the euro area, has been on the rise since the last quarter of 2017. In the euro area, there are more companies expecting  a decrease than companies expecting the increase of spending. In Slovenia, optimism is stronger; there are more companies that expect an increase than those which expect a reduction. With regard to export demand, Slovenian companies are even more optimistic, although the basic characteristics of expectations  is the same as for total demand.  The intensity of the expected demand of manufacturing enterprises in Slovenia is approximately at the level of the beginning of 2017 when GDP grew by about 1% per quarter.

Expected demand in the service sectors of Slovenia does not show any hindrance. At the beginning of 2018, the expected demand shifted considerably downwards, but in the last three quarters it has been significantly corrected. Even in the euro area, expectations in the service sectors have not yet started to fall significantly. Such dynamics of expected demand in the service sectors is not surprising, since their activity after the crisis has not even reached normal intensity.

In November, the commodities balance remained slightly positive after months. The revenues from foreigners' arrivals to Slovenia was more than three times greater than the outflow for the traveling  of Slovenians abroad.  Net balance is € 1619 million.

In November 2018, total exports amounted to EUR 2797 million , while total imports totaled EUR 2803 million ear before), with a deficit of EUR 6 million and a 99.8% coverage of imports by exports. The EU's exports of goods in the EU amounted to EUR 2125 million, while imports from reached 2162 million more), representing a deficit of EUR 37 million or 98.3% of the coverage of imports of incoming inflows. In exchange with non-EU countries, exports amounted to EUR 671 million  and imports totaled EUR 641 million , representing a surplus of EUR 30 million or 104.7% of imports covered by exports.

In the first 11 months of 2018 total exports amounted to € 28,597 million  total imports to € 28,243 million . Exports. to non-EU countries, s amounted to € 6,474 million; imports amounted to € 6,058 million, representing a surplus of € 416 million or 106.9% of imports covered by exports. In 11 months of 2018, exports of tourism services Slovenia amounted to € 2325 million.  The balance is a net inflow from travel of € 1619 million.

In the whole of 2018, the prices of imported products were 2.7% higher, and only in December 2018 they  t was 1.3% higher than a year before.  The terms of trade have improved by 1.1% in November and by 1.5% for the EU28.

The volume of world trade stagnated in August and September, but began to rise in October. In this month it was again (similar to at the beginning of last year) almost 5% higher than in the comparable period 2017. Despite the resumption of global trade growth, the economic climate in the EU deteriorated  Economic pessimism is increasing both in industry and in the service sector.

In the first ten months of 2018, compared to the comparable period of 2017, the volume of service activities strengthened . In October, it was 10% higher than a year ago. In the autumn, the activity of the services sector is clearly strengthened. 2018.

Data on tourist overnight stays show that tourist activity in t eleven months of 2018,  was one quarter more than its level between s in January and November 2017. In particular, the there was an enormous incrase in the number ofs of foreign guests , reaching 72% of the total number of overnight stays.

In retail trade, in the eleven months of 2018, the real turnover in the sale and servicing of motor vehicles by 13%, in service stations by 12% and in the sale of non-food products by 5%, was higher than a year before. On the other hand, sales of food, beverages and tobacco decreased by almost 5%.

In the first eleven months of 2018, the transport of goods in Koper increased by 4% compared to the year before. In addition, in November 2018 alone, it exceeded its comparable level from 2017 by almost 21%. In other transport industries, a deterioration is observed towards the end of 2018.

In the first eleven months of 2018, the transport of goods in Koper increased by 4% compared to the year before. In addition, in November 2018 alone, it exceeded its comparable level from 2017 by almost 21%. In other transport industries, a deterioration is observed towards the end of 2018.

Price expectations slow down considerably slower than actual prices. Consumer prices fell by 0.6% in December, while longer-term (year on year) growth fell from 1.9% to 1.4%. The priced of services went up and prices of goods. went down. The prices of petroleum products contributed the most ) to the December decrease in prices. In Slovenia, therefore, the December dynamics was a bit more modest than in the euro area. The prices of industrial producers fell by 0.1% in November; they rose by 1.6% in the longer term (year on year).

Short-term price expectations are calmer for goods. Expected trend of price growth is also decreasing in construction; the proportion of construction units that expect price increase is practically the same as the share of those who expect price reductions. In other segments price expectations remain virtually unchanged. The prices of raw materials decreased in euros in the last month.

Average wages jumped significantly in November but the increase was practically only seasonal. In some sectors, wage jumps were l significantly higher; the increase in wages was the highest in e financial and insurance services sector.. In the public sector, average wages increased considerably less than in the f the business sector. over the course of one year. Inflation confirms that there is no noticeable pressure on labor costs on price growth. Therefore, the dynamics of commodity prices continues to be by far the most important factor in changing inflation, both in the euro area and in Slovenia.

The solid trend in general government revenue continued. General government revenue fell by 1.9% in November but  the reduction was entirely seasonal.

In November, the decrease in general government revenues was particularly high in indirect taxes, which. his fell by more than 5% in November, but e such a fall was due to  the seasons. In November, the more long-term dynamics of indirect taxes (growth of the impulse trend) was very high.

Revenue from direct taxes was practically stagnating in November while d their more long-term dynamics increased. The ong-term growth in general government revenue is still high and stable since the end of 2016, but in 2017, growth fluctuated significantly. However, fluctuations in tax yield have slowed down considerably after the end of 2017, and revenue for both indirect and direct taxes has been growing for a year at high and stable rates of growth above 5% per annum.

Favorable (high and stable) is also the short-term dynamics of general government revenue after 2016. Growth in general government revenue was not only noticeably large in November, but also very uniform in tax forms. Excise duties, for example, fluctuated throughout ar 2018 around the same values as in 2017, so that by November they were cumulatively lower than the corresponding values in 2017 by only 0.2%! In doing so, excise taxes contribute almost 10% of total public revenues.

The basic characteristics of the lending activities of banks remain unaltered. Loans to companies are stagnating or declining, although the economy has been growing rapidly for four years), and although the level of credit is more than half of the level of credit just before the crisis began, ten years ago.

Household and corporate deposits continue to grow rapidly. Regardless of such a high current dynamics, longer-term growth has fallen below 5% a year after a long time, thus lagging behind in the long-term dynamics of household deposits. Households' deposits are almost three times higher than corporate deposits, but continue to grow at a much slower pace.



Full article is available in Slovenian language.

Only a part of the articles in the publication Gospodarska gibanja (Economic Trends) is written in the English language. Please visit the Slovenian web page.


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