Release date 2. April 2021

Eastern “mini lockdown” not a game changer

On Slovenia's Economy

• Gross disposable income of households increased in Q4 2020 by one tenth (+3.8% or EUR +1.1 bn in 2020/2019). In times of crisis, household income falls but large public transfers (through job protection schemes and direct transfers) helped to limit the reduction in labour income in depressed sectors. The other interesting thing to note is the opposite balance – the final household expenditure fell by 15.4% in Q4 2021/Q4 2021 (by one tenth 2020/2019) what was the first reduction since 2013 (adoption of ZUJS which temporarily reduced public expenditure across many areas). Limitations brought by COVID-19 changed the purchasing and saving patterns. In Q4 2020, households saved 30% of disposable income, in 2020, the saving rate stood at 25%. This trend was noticed all over the world and explains part of irrational exuberance lately seen on financial markets. 
• Three large manufacturing companies announced their exit from Slovenia. We are still trying to estimate the effect which seems to remain limited (1,000 employees in total in 1 year) to local communities. Two out of 3 companies were primarily focused in supplying textile products to the automotive industry whereas one was focused on producing spectacle frames. All 3 are parts of multinationals who don’t see Slovenia as a cheap production destination anymore. All these companies have already been facing intensive competitive pressure from alternative suppliers from Asia, CEE and Turkey. Exit of those companies should lead to a higher productivity in the Slovenian manufacturing sector over time as most of these employees will relocate to other sectors with higher productivity within manufacturing. The manufacturing sector is namely still looking to add to the headcount in aggregate, at least in the next 6-month term.  

      Read also in the attachment about:

• New preventive/restrictive measures
• Electricity consumption
• Trucks driven on highways
• Registered unemployed people
• Data on tax certification of invoices
• Consumer prices (CPI Index)

On EU-27 

• The March indicator of Austrian purchasing managers was the 2^nd highest (after December 2017) in the history of measurement of the indicator (22 years). Production and new orders increased sharply, with companies producing even more without supply delays (metals and electronic products). Higher transport and raw material prices are also expected to significantly increase product sales prices. For the 3^rd consecutive month, employment strengthened. Purchasing managers increased purchases the most in last 38 months..

    Read also in the attachment about:

• Economic sentiment indicator
• Fiscal spending plan in USA
• Unemployment (US Federal Reserve predicts)

Must Read of the Week

• Macroeconomic consequences of pandexit (available at: https://www.bis.org/publ/work932.htm)

Comment: The end of the pandemic may be within sight with the arrival of vaccines. But unexpected challenges could still emerge and complicate the pandexit process. This paper quantifies the output implications of some downside scenarios that could transpire in the coming months. The substantial implications for output under these scenarios highlight the need for continued vigilance, and to speed up the roll-out of vaccines particularly in countries where susceptible populations remain high.

Forecast of the Week

• Feb 21 indus. production in manufacturing in Slovenia (Statistical Office of RS): +2.0% y-o-y

Comment: After a 1.8 % y-o-y rise in January, strong sentiment and anecdotal evidence confirm our optimistic view for Slovenia manufacturing sectors for February. Our annual forecast stands at +5 %.    

Quote of the Week

“Our world is increasingly complex, often chaotic, and always fast-flowing. This makes forecasting something between tremendously difficult and actually impossible, with a strong shift toward the latter as timescales get longer.”
(Andrew McAfee)

More information at: bojan.ivanc@gzs.si

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