Lift of lockdown measures taking further pace

On Slovenia's Economy

• December’s industrial production in manufacturing was 0.7% down y-o-y (our expectations: flat), bringing the whole year decline to 6%. Revenues declined more in 2020, by 7.8% due to 1.8% reduction (on average) in prices of industrial products. What can be observed is that prices of commodities and similar inputs began to rise in the 2nd half of 2020 and therefore pushed December’s annual growth in revenue to +0.1% (production down by 0.7%). The division of industrial production by technological advancement of sectors (most advanced: pharmaceuticals, electronic industry; least advanced: textiles, food, wood) shows that the growth in December was present y-o-y in automotive, electric equipment, steel industry, whereas pharmaceuticals (two companies, producing generic medicines) and textiles/wood experienced a rather weak output. Nevertheless, the pharmaceutical industry was the best performing industry in 2020 as production increased by about 6 to 7 % (our estimate as this data is protected due to statistical confidence). Comparing trends to other EU countries, for which information is available, the Slovenia’s December reading is close to Germany and Spain and above France (3 % decline) but below Czech Republic (+0.5%).
• Just as the public was frightened by new mutated variants of the COVID-19 virus, the numbers of infected, hospitalized, and dead people in Slovenia continued to decline on an unprecedented pace, similar to that in May 2020. The orange zone on the government traffic sign implies that all primary schools are opening on 15th February, the same goes for the last year class at secondary schools, including some lectures on universities. In addition, all retail outlets are able to operate freely. A very important restriction lifted is free movement across municipality borders and gatherings of up to 10 people. Curfew remains in place (between 9 p.m. and 6 a.m.). From Saturday on (13th Feb.), people are able to enter Slovenia without quarantine and a negative COVID-19 test if they were already vaccinated or they already recovered from this disease in past 6 months. About 44 thousand people have already been vaccinated (2.1% of population) with two jabs, mostly elderly people which are most at risk. Until the end of February, all people above 80 are expected to be vaccinated.

       Read also in the attachment:

• Negative interest rates on bank deposits
• Economic parameters
• Winter interim’s forecast of EC
• Monthly report on government deficit

On EU-27 

• ING nowcast indicator for EA-19 sees no changes as lockdowns are largely in place across the EU. There is less support to be expected from manufacturing in 1q 21 compared to 4q 20, mainly due to an increase in supply time and lack of chips for automotive sector. We do expect gradual reduction in restrictiveness measures across major EU countries in the coming months.
• Read also in the attachment: Expectations on US stimulus package

Must Read of the Week

• Think Again: The Power of Knowing What You Don't Know by Adam Grant. Available at bookstores.

Comment: this book is a must-read for anyone who wants to create a culture of learning and exploration, whether at home, at work, or at school.

• Getting Back to a Strong Labor Market, remarks by Jerome H. Powell. Available at: https://www.bis.org/review/r210211a.pdf

Comment: Fed’s Governor is confirming its view it will “look through” the pick-up of CPI in the following months and will focus more on domestic job market. US job market is still short of 10 million jobs (compared to Feb. 20). A very interesting fact to see on one of the graphs is the steady outperformance of bottom wage earners compared to other 3 quartiles.

Forecast of the Week

• Feb 21 Consumer Sentiment in Slovenia: + 2 p. p. m-o-m (previous month: +1)

Comment: Removal of lockdown measures as the most important factor influencing the mood of households. .

Quote of the Week

“We really can't forecast all that well, and yet we pretend that we can, but we really can't.”
(Alan Greenspan)

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