Release date 9. April 2021

February’s Industrial Production and Exports Data Below our Expectations

On Slovenia's Economy

• The February data on industrial production and exports of goods were somewhat disappointing. In manufacturing, industrial production was 1.6% down year-on-year, albeit almost unchanged in the first two months (0.1%). After a 1.8% growth in January, we expected a 2% growth in February, whereas a drop at 1.6% was below our estimates, even after accounting for 1 working day less in Feb. 21 compared to Feb. 20. A more detailed insight into sectoral trends shows that production in high-tech (-9.4%) and low-tech sectors (- 1.9%) was lower. In the first group of sectors, this is due to a lower production in pharmaceutical industry (data are not officially confirmed due to statistical secrecy, but we are confident this sector represents a major part of this sub-sector). In low-tech sectors, the decline refers mostly to the past production transfer abroad of a larger company in the leather industry (for customers in the automotive industry; -32%), partly also in the production of clothing (-5%) and production of food (-4%). Unexpectedly high declines were recorded in the manufacture of paper (-15%), non-metallic mineral products (-16%), motor vehicles (-10%) and other vehicles and vessels (-11%). Growth was higher in the manufacture of chemicals, chemical products, rubber and plastics (7-9%), but slowed down in the manufacturing of electronic and optical products (3.6%) and electrical appliances (4.7%), which because of a inadequate availability of input products (semiconductors, other components). After a weak January (exports fell by 2.8% year on year), February’s exports of goods strengthened (+2.6%) despite one working day less, but less than we expected (+4.0%). Exports to EU-27 were even lower by 2.7% year-on-year, while to non-EU countries they were up by 14.7%.
• In March 2021, 7 thousand new cars were registered for the first time, which is 46% more than in February and 157.6% more than in the same period of last year, when car dealerships had to close their doors due to the first wave of the epidemic. In the first three months, 16.3 thousand new cars were registered, which was 12.3% more than in the first quarter of 2020. Industry experts estimate that the growth is due to higher sales to legal entities and one-day registrations (cars sold in Slovenia but exported to other markets to other final customer), while the retail market is still lagging behind by 7%, which is also due to delayed deliveries and production restrictions 

      Read also in the attachment about:

• Government COVID-19 traffic sign
• Registered unemployed
• Electricity consumption
• General government deficit
• Total loans of non-banking sector

On EU-27 

• The German IFO Institute estimates that in March there were 2.7 million employees in parttime support schemes in Germany (2.9 million in February) or 8% of total. This number decreased mainly in industry (from 494 to 436,000 people or to 6.3% of all). Despite the reduction of needs for part-time scheme financing of wages in the hospitality and tourism sector, their share in this sector remains high (half of all employees) as it is still high in trade (16% of all in the sector or 718,000).

    Read also in the attachment about:

• German passenger car assemblers and suppliers
• The ILO unemployment rate in the euro area
• IMF forecasts
• U.S. sentiment in services and industry

Must Read of the Week

• Redefining insurance supervision for the new normal (available at: https://www.bis.org/fsi/fsibriefs13.htm)

Comment: This report is about how the pandemic accelerated the digitalisation of both insurance supervisory processes and the insurance business value chain. As the pace and scale of digital transformation continues to increase, so will cyber security and policyholder protection risks, which must be appropriately managed.

Forecast of the Week

• Feb 2021 exports of services (Statistical Office of RS): -22.0% y-o-y

Comment: After a free-fall in January (-27%) we expect other types of services to withstand the high decrease in foreign tourism receipts, which usually represents about 1/3 of services exports.    

Quote of the Week

“Because of the rate of technology change, forecast horizons are shrinking.”
(Steve Jurvetson)

More information at: bojan.ivanc@gzs.si

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