Slovenia’s first GDP’s estimate above most optimistic expectation

On Slovenia's Economy

• First release of Slovenia’s GDP at -5.5% (real) for the 2020 was above our expectations (we were on the optimistic side of the camp) which stood at -6%. Nominal GDP decreased just by 4.3%. Contribution of the household spending (55% of GDP) proved to be the main contributor to the reduction, falling by 9.8%. Real exports fell (-8.7%) less than imports (-10.2%) implying positive contribution of net exports to GDP (by 0.4 perc. points). Government consumption increased by 1.8%, whereas investments fell just by 5.8%. Of that, investments into fixed assets declined by 4.1% whereas declining stocks removed from the GDP 0.4 percentage points.
• Looking across main sectors, value added declined mostly in services (culture, sports, personal care etc.), that is by 20%, in retail and accommodation (by 11%) and in technical & professional services (by 9%). The latter sector came as a surprise (remote work was possible, and activity should not decline much according to other statistics) and later revisions could dramatically change the numbers. Financial sector’s growth in value added was highest at 5.7% whereas in real estate and construction, change was minor. In the financial sector, one-off item that added to the growth could be merger of 2^nd and 3^rd largest bank.

• Calendar effect was noticeable adding 0.6 percentage points to the GDP (calendar adjusted GDP was lower by 6.1%) which was due to higher number of working days in 2020 compared to 2019. Comparing the adjusted GDP date to EA-19 (-6.8%) and EU-27 (-6.4%) confirmed our view that GDP fell less primarily due to higher share of manufacturing in Slovenian economy.

• We estimate that later revision of GDP data may hint to a higher fall in GDP, but not much (0.2 to 0.3 percentage points). Based on the released data, a 5% rebound in 2021 looks optimistic (higher base effect) what lead us to reduce the central estimate to 4 to 4.5% growth.

      Read also in the attachment:

• Annual growth rate in retail prices (CPI)
• Business climate in Slovenia
• Number of (net) registered unemployed
• Electricity production in January 2021

On EU-27 

• Economic sentiment indicator (ESI) in the EA-19 and EU-27 climbed to its highest level since March 2020. The change in rate was highest in Poland, Italy, Croatia, Slovenia, Austria, Check Republic and Ireland. In Slovakia and Spain, decrease was the highest (8 out of 27 countries experienced a decrease).

    Read also in the attachment:

• Leading indicator IFO
• Austrian manufacturers
• US retail sales
• Container freight rates

Must Read of the Week

• Annual research on availability of financing for companies for 2020 (author: Bank of Slovenia). Available only in SI at: https://bankaslovenije.blob.core.windows.net/publication-files/rezultati-ankete-o-virih-financiranja-podjetij-2020.pdf

Comment: Companies complained that their terms of financing deteriorated (higher interest rates and other administrative costs). In addition, the red tape they are facing and the long period for loan disbursement were the main other complaints. Survey shows that 90% of large companies and 60% SMEs asked for government support measures in 2020.

Forecast of the Week

• Feb 21 Global manufacturing PMI (J.P Morgan): 54.1 (at 53.5 in Jan 21)

Comment: global manufacturing uptake continues led my US and Asia and Europe finally jumping in.

Quote of the Week

“The key to making a good forecast is not in limiting yourself to quantitative information. Rather, it’s having a good process for weighing the information appropriately.”
(Nate Silver)