Release date 15. March 2021

January’s Manufacturing Data Above Estimates

On Slovenia's Economy

• There is a lack of forward-looking indicators in the past 2 weeks. Coincident indicators show that GDP was probably 2 % lower y-o-y in January, approximately on the same level in February and will probably grow in March as given current circumstances a hard lock-down for the 2^nd half of March 2021 is unimaginable. 
• January’s industrial production in manufacturing was up by 1.8 % y-o-y (above our estimates, unchanged in EA-19), due to reasonable growth in high tech industries (+5.4%, mainly pharmaceuticals and electronics) and low medium tech (+5.8%, manufacturing of steel and steel products, plastics, rubber). On the other hand, there was a quite remarkable decrease in low tech (-4.3%; textiles, wood, food), what probably explains the shift of some manufacturing capacities to low wage countries in the region. Lower prices in commodities still had a positive effect on final prices as the total sales decreased by 1.1 %. 

• Comparing this data with exports of goods (-2.8 %) shows a puzzling set of data, but can be explained by lower re-export of goods, not produced in Slovenia (cars, oil derivatives). This can be confirmed by a high decrease in imports (-8.5 %). Based on the manufacturing outlook (sentiment indicator in Slovenia and region) we do expect the export to grow in the following months (we are quite confident in trends until May 2021), especially considering the Q2 2021 as the base effect was strong (Q2 2020 exports were weak).

      Read also in the attachment:

• A detailed set of exports data for 2020
• Data on infections
• Number of (net) registered unemployed
• Growth in banking loans to companies

On EU-27 

• ECB confirmed it would speed up a bit its purchases of EA-19 government bonds in the next quarter what should effectively prevent the yields on L-T bonds to rise further. They “will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation.” More at: https://www.ecb.europa.eu/press/pr/date/2021/html/ecb.mp210311~35ba71f535.en.html

    Read also in the attachment:

• OECD issued quite an upbeat macro forecast
• The pandemic picture in Europe
• GDP growth forecast for 2021 for Poland

Must Read of the Week

• Interrelationships between Human Capital, Migration and Labour Markets in the Western Balkans: An Econometric Investigation (author: The Vienna Institute for International Economic Studies). Available in EN at: https://wiiw.ac.at/interrelationships-between-human-capital-migration-and-labour-markets-in-the-western-balkans-an-econometric-investigation-p-5694.html

Forecast of the Week

• Jan 21 Exports of services in Slovenia (Bank of Slovenia): -12% y-o-y

Comment: Transport and construction sector as well as high added value services are expected to cushion the fall in tourism receipts.

Quote of the Week

“Economists have allowed themselves to walk into a trap where we say we can forecast, but no serious economist thinks we can.” (Tim Harford)

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