Release date 21. May 2021

Financial Figures for 2020 at Company Level Above Expectations

On Slovenia's Economy

• On Friday, 21 May, Ajpes already revealed long-awaited data on the financial performance of companies and sole proprietors in 2020. Aggregate revenues of companies fell by 5.7% (of those, exports by 7 %), and that of sole proprietors by 5%, while value added dropped by about 1 %. Lower raw material prices in 2020 and state support measures (subsidies received) were key to ensuring that value added did not shrink. Employment, measured by working hours, decreased only by 2%, with employees waiting for work or part-time working remaining part of these number. Labor productivity has therefore increased by 0.8% (EUR 47,160). Despite a similar level of value added, net profit was 38% lower (we expected a 25% drop) and amounted to EUR 2.8 billion. We believe this is mainly attributable to revaluation of assets on the balance sheet although this detail has not been revealed yet. A more detailed analysis of financial performance will be possible when we will be able to look at EBITDA numbers and sector changes. Our rough estimate is that EBITDA shrank by about 15%.

• In May 2021, the consumer confidence indicator improved by 7 percentage points at the monthly level and by 17 percentage points at the annual level. Level of improvement was expected but such a high rise is still a very positive outturn. The indicator is also 3 percentage points higher than the long-term average.

• The number of registered unemployed is still declining (76,300 on 19 May, 1,000 less in one week), corresponding to the additional relaxation of stringency measures and opening of service activities (fairs etc.)..

      Read also in the attachment about:

• Turnover of lorries on Slovenian motorways
• Electricity consumption
• Average gross wage
• Number of persons in employment
• March data on banks' operations in Slovenia
• Share of non-performing exposures (NPEs) at Slovenian banking system
• Number of employees working from home in 2020

On EU-27 

• On Tuesday, 18 May, Hungary published its first estimate of GDP for the 1^st quarter, which was higher than expected. Compared to the previous quarter, it strengthened by 1.9%, and was weaker by 2.3% year on year. The country is expected to reach the pre-crisis level of GDP in the second quarter. Industry, financial services, and the ICT sector were key to economic growth in the 1^st quarter. According to ING Bank, the year-round economic growth will reach 6%, and the central bank will soon start raising the central interest rate due to imported inflationary pressures, which will be the first time since 2011. Romania surprised as well, as quarterly growth at 2.8% implied only 0.2% weaker economy than in the 1^st quarter of 2020. Poland has published an ambitious reform plan for the period 2021-2030, which is expected to increase health expenditure from 5.3% to 6% by 2023 and then to 7% by 2027 It is intended to further increase the general tax relief, relieve the burden on middle - class wages as well as introduce the payment of social security contributions to civil law contracts. Infrastructure investments are ambitious. A high-speed train line, a new central airport, cultural and sports facilities, and digital infrastructure are to be built. The state is also expected to increase borrowing guarantees for larger families. The annual cost of this 10-year program is PLN 65 billion, or 2.8% of GDP per year. At EU level, Poland is in favour of exempting defence expenditure from public finance rules, devoting 2% of its GDP to this, and geopolitical tensions in its region are more pronounced.

      Read also in the attachment about:

• The price of Brent
• Job market in US

Must Read of the Week

• The constraint on public debt when r < g but g < m, Ricardo Reis https://www.bis.org/publ/work939.htm

Comment/Abstract: With real interest rates below the growth rate of the economy, but the marginal product of capital above it, the public debt can be lower than the present value of primary surpluses because of a bubble premia on the debt. The government can run a deficit forever. In a model that endogenizes the bubble premium as arising from the safety and liquidity of public debt, more government spending requires a larger bubble premium, but because people want to hold less debt, there is an upper limit on spending. Inflation reduces the fiscal space, financial repression increases it, and redistribution of wealth or income taxation have an unconventional effect on fiscal capacity through the bubble premium.

Forecast of the Week

• May 2021 Business Climate in Slovenia (Statistical Office of RS): +0.4 b. p. vs April 21 figures

Comment: After a positive monthly increase in April (+0.2) we expect an increase in sentiment pushed up by services as well as consumer.

Quote of the Week

“The goal of forecasting is not to predict the future but to tell you what you need to take meaningful action in the present.”
(Paul Saffo)

More information at: bojan.ivanc@gzs.si

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