Release date 7. May 2021

Prospects of a further relaxation of lockdown measures rising

On Slovenia's Economy

• The Employment Service of Slovenia published the latest unofficial data on the number of unemployed on Wednesday, 5 th of May, which we believe is the most important short-term forward-looking indicator for Slovenian economy. Their number is still declining (78,000), with the number of new jobs increasing significantly in the current week (first week of May), which was also pronounced by the previous holiday week (school holidays in the last week of April lowered employment growth in the previous week). Source: Employment Service of the Republic of Slovenia.
• In April 2021 consumer prices (CPI, not the same as HICP) were on average 2.1% higher on an annual basis and 1.0% higher month on month. In one year, prices of services decreased by 0.7% on average, while prices of goods increased by 3.6%. Prices of non-durable goods increased the most, by 5.2%, prices of durable goods by 1.2% and prices of semi-durable goods by 0.2%. Higher electricity prices (by 40.4%), which were at a similar level as before the outbreak of pandemic in March 2020, contributed the most to the annual inflation in April 2021 (almost 50% of the increase or by 1 percentage point). The fact that last year households and certain smaller business customers were temporarily exempted from paying certain contributions for consumed electricity also contributed to this price change. Rising price of petroleum products contributed significantly to the annual inflation as well (0.8 percentage points). Despite such a high year-on-year rise in prices, they increased only marginally (by 0.1%) in the first four months, while they fell by an average of 0.3% in the last 12 months. In the coming months, due to the opening of catering and tourist capacities, prices of services are expected to rise and with brent prices reaching levels close to USD 70 per barrel, this increases the likelihood of a further rise in retail fuel prices. Year-on-year growth of prices (CPI) in May is expected to be at least as high as in April (at 2.1 to 2.3%).
• March's electricity consumption in Slovenia was 1% lower year on year, while production of electricity was higher by 10 %, mainly due to a 50% increase in production in thermal power plants (repair in March 2020).
• The monthly ILO survey unemployment rate in Slovenia in March 2021 stood at 4.8%. It was 0.1 percentage point lower than in February 2021 and slightly higher than in March 2020 (4.5% at the time). It is expected to decline in April and May, as indicated by data on the unofficial number of registered unemployed.

      Read also in the attachment about:

• Electricity consumption
• Prices of imported products
• The population of Slovenia
• Retail sales in the EU-27
• Retail trade
• Overnight stays of tourists in Slovenia

On EU-27 

• The first release of GDP in the EU-27 showed a 1.7% year on year decline, with Spain (-4.3%) and Germany (-3%) disappointing, while France recorded growth (+1.5%). So far, the first estimate has been disclosed by 12 member states, with Lithuania (+1%) boasting growth, while the decline in Sweden has been insignificant (-0.2%). For Slovenia, we estimate that the decrease in GDP will probably happen, but it will probably be smaller than in the region, somewhere between 1 and 1.5% year on year.
• Industrial production in Germany increased by 5.1% year on year in March and exports by 16%. After weaker industrial data in the first months of the year on the back of a long Christmas break, harsh winter weather and the Chinese New Year, industry has finally gained momentum. In the first quarter the UK for the first time ever dropped out of Germany’s Top 5 most important export destinations. Industrial orders were up by 28% in March 2021 and have increased in ten of the last eleven months. Looking ahead, filled order books and low inventories bode well for industrial activity. Fiscal stimulus and investment initiatives around the globe should also benefit German industry. Supply chain disruptions (blockage of the Suez Canal or semi-conductor delivery problems) have, and will, distort industrial activity. However, these disruptions will only delay the catch-up of German industry.
• At the end of April more European countries submitted their recovery and resilience plans to the European Commission to access funds from the 'Next Generation EU' instrument. Italy presented an ambitious overhaul plan of the Italian economy worth EUR 235bn (14% of GDP stretched over six years) that also foresees crucial structural reforms in the legal system and public administration. France and Germany's recovery plans (EUR 41bn and EUR 28bn, respectively) focussed similarly on green investments and digitalisation, but structural reforms played a smaller role.

    Read also in the attachment about:

• The US economy (GDP) 
• etc.

Must Read of the Week

• Financial Stability Review of Slovenia, Bank of Slovenia (available at: https://bankaslovenije.blob.core.windows.net/publication-files/fsr_april_2021.pdf, only in SI)

Comment: This report brings a comprehensive overview of important developments within economy in 2020 that affect the risks within banking sector, resilience of banking sector and provides overview on households and corporates flows in 2020. Data on nonbanking financial institutions for 2020 is also providing additional insights into their role within economy.

Forecast of the Week

• Mar 2021 Industrial production in manufacturing in Slovenia (Statistical Office of RS): +6 % year on year

Comment: After 1.6% year on year drop in Feb 21 which was due to 1 working day less in 2021, we expect a hefty rebound in March which should not come as a surprise due to imposition of heavy lockdown in March 2020 which negatively affected also manufacturing sector in Slovenia

Quote of the Week

“No amount of sophistication is going to allay the fact that all your knowledge is about the past and all your decisions are about the future.”
(Ian E. Wilson)

More information at: bojan.ivanc@gzs.si

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