OpportuniOpportunity costs of closing down of thermoelectric company Šoštajn and coalmine Velenje

The speed of exports continues; exports outside the EU strengthened even more than total exports and far more than the EU's exports; year-on-year dynamics of exports outside the EU is by almost half higher than the EU's export dynamics. In the period of the rise in economic activity, the expenditure components that drive the growth are exchanging, but exports remained crucial for the whole period and overtook economic activity by an average of more than 4 percentage points of year-on-year growth, and in the last two quarters, even by about 6 percentage points. The expected demand dynamics continues to intensify.
 
The October surplus in the growing trade in goods was very high, and the trend of export dynamics exceeded the trend of import dynamics. Terms of trade over the last year have deteriorated slightly. Economic relations with the rest are thus the main driver of favorable economic activity.

In the third quarter of 2017, the world trade was already well over five percent above the comparable last year level. Despite the strengthening of the euro, exports and imports of goods and services from the euro-zone countries increased roughly as fast. Like Slovenia, the euro group also has a large surplus on the account of goods and services. The situation on the main Slovenian export markets continues to improve; in the EU, industrial production growth is accompanied by the growth of retail trade and construction, and the decline in unemployment. November surveys on demand and expectations point to continuing improvements of orders and expectations; in Slovenia, estimates and expectations are much better than in the euro group or in the EU, and even more favorable than before the crisis a decade ago.

Rapid growth of industrial production continued in October. Between January and October 2017 compared to the same period in 2016, production in manufacturing increased by more than eight percent in real terms, mostly in the automotive, mechanical, leather and electrical industries. Production in manufacturing was also above the comparable level in 2008, mostly in the computer industry and the electrical industry, the automotive and metal industries, while the textiles and wood industry, the non-metals industry, the beverage industry and the chemical industry remained under the comparable level of 2008.

Movements at the end of 2017 are favorable in non-industrial sectors, as well. The value of construction works is rising rapidly, but for the time being, it remains far below the level reached at the burst of the real estate bubble in 2008. Revenues of most service sectors are rising by more than ten percent annually. Overnight stays of tourists in October were larger than a year earlier, this time more due to domestic than foreign guests. The latter marked a year of high growth, and their number was also significantly larger than before the crisis. The transportation is in good shape with increased number of passengers in urban transport, at the airports, and the number of registered cars for the first time being one third higher than a year ago. The quantity of goods transshipped in Koper fluctuated significantly, in October it was lower than a year before.

The number of active population is growing rapidly; though it remains smaller than before the financial crisis in 2008, but it is already greater than before the start of overheating in 2005. Growth of employment has rapidly reduced the number of job-seekers, which was 15 percent lower than in the previous year. The unemployment rate according to the International Labor Organization's methodology for the third quarter of 2017 was 6.3 per cent and is among the lowest in the EU.

In December, prices remained unaltered, while they increased year-on-year; the prices of housing and household equipment increased while the prices of clothing and footwear decreased. The harmonized price index rose in December and also year on year. The real estate prices are still accelerating. The prices of industrial producers also rose in November year-on-year; the raw material prices increased the most, while the prices of energy decreased. Price expectations do not indicate any major changes in the structure or the intensity of the price dynamics. The prices of raw materials continue to decrease.

Average wages increased in October, mostly in agriculture, manufacturing, water supply, construction, transport and financial activities. In the public sector, wages in health care have grown, they have fallen in education and administration. In the longer term, wages in the manufacturing, construction, and professional and technical activities were the fastest growing. In the public sector, wages in the health care and in the administration increased considerably and much less in education.

The promotion of average wages is also reflected in the growth of unit labor costs. In only five EU countries and in two countries in the euro area, the dynamics of unit labor costs in the last year was greater or similar than in Slovenia. Even in the public sector, unit labor costs are increasing considerably more than in the euro area, but the difference is much lower than in the private sectors; in eleven EU countries and three countries in the euro area the unit labor costs in the public sector are growing faster than in Slovenia.

In spite of fluctuations, general government revenues continue to grow. The reduction in both direct and indirect taxes in November was primarily seasonal. In the longer term, the revenues of taxes on income and wealth increased as quickly as in the euro area, but their level is much lower. Taxes on production have been (after tax rates corrections) rising practically equally fast and at the same level as the corresponding taxes in the euro area.

Loans continue to stagnate in the same manner as in the euro area, but at a much lower level, while loans to households are growing faster. A longer-term dynamic remains unaltered, year-on-year growth rates of loans to companies remain stable, while they are slowly increasing in the general population. The deposits of households and enterprises continue to increase. The stagnation of loans to companies and the simultaneous increase in deposits led to a drastic reduction in the ratio of loans and deposits. The ratio is also declining in the euro area, but slower. ECB interest rates remain unchanged, interbank interest rates are changing very little, and lending and deposit rates also stand.

In October, a record surplus in the current account of the balance of payments was achieved. It was as previously generated by the surpluses in the goods and services accounts (mainly transport and tourism), and reduced by the deficits on the primary income account (from capital) and on the secondary income account (mainly state payments to the Brussels treasury). The gross and net external debt is decreasing, as well as the yields on Slovenian government bonds.