Release date 26. March 2021

Improving Current Dynamics but Fear of Further Restrictions More Present

On Slovenia's Economy

• February full-month data on electricity consumption sounds intriguing (-8.1% drop at large energy users, after -6.5% in January) as industrial production in manufacturing was up by 1.8% y-o-y in January (February release should not be very different due to rising optimism). The rather large difference can probably be attributed mostly to growth in less-energy intensive production, in the high-value added segments (electrical, pharmaceutical, automotive). Drop in electricity consumption at retail and services was in February 12% lower y-o-y, an improvement with regards to January’s drop (-14%). On the other hand, lower mobility of households led to 7.7% higher consumption of electricity at households. 
• Due to a further increase in infections and hospitalizations, the Slovenian government adopted new preventive/restrictive measures to reduce the rise in new cases. Three (out of 12) regions were labelled as “red” implying that entry and exit of people is limited, but schools and retail remain open even in those regions. We see these measures as rather “mild” and economically less harmful. IJS (local think tank) estimates that Slovenia could enter the “red” phase by the end March/beginning of April, but as the definition of phases becomes more flexible, economic damage is not expected to be as harmful as in January, according to our best judgement. 

      Read also in the attachment about:

• Last available data on dynamics in economy
• Trucks driven on highways
• Registered unemployed people
• Business climate
• IMAD macroeconomic forecast report
• Residential real estate prices
• Transport indicators
• Value of construction output

On EU-27 

• IFO, a respected German think-tank revised its macro forecast for Germany standing currently at 3.7% for 2021 and at 3.2% for 2022 (available only in German at: https://www.ifo.de/publikationen/2021/aufsatz-zeitschrift/ifo-konjunkturprognosefruehjahr-2021-deutsche-wirtschaft) a negative revision for 2021 (-0.5 p.p.) and a positive one for 2022 (+0.7 p.p.). They estimate the “costs of COVID-19 pandemic” at EUR 405 billion, at 12% of German GDP. In their regional estimate, they skipped Slovenia, but issued the most positive forecast for Hungary (+6.4%), Czech Republic (+6.1%) but less for Poland (+4.1%). The world trade should increase by 8.1%, after a 5.3% fall in 2020. They see average price of Brent at USD 61 per barrel at EUR/USD at 1.21, at least for 2021.

    Read also in the attachment about:

• Composite PMI in EA-19
• Aautomotive manufacturing industry

Must Read of the Week

• Coronavirus Crisis Puts German Hotels under Particular Financial Pressure (available at: https://www.ifo.de/en/node/62297)

Forecast of the Week

• Mar 21 CPI in Slovenia (Statistical Office of RS): +0.2% y-o-y

Comment: After a 1% decline in Feb 21, higher crude oil prices should reverse the negative trend in prices from previous months.

Quote of the Week

“The quest for certainty in forecasting outcomes can be the enemy of progress.”
(Nate Silver)

More information at: bojan.ivanc@gzs.si

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