Weekly Economic Highlights: The beginning of the Calendar Summer in the Western Hemisphere Raises the Heat in the Economy

18..6._2021_Weekly Economic Highlights v2

Release date 21. June 2021

The beginning of the Calendar Summer in the Western Hemisphere Raises the Heat in the Economy

On Slovenia's Economy

  • The Bank of Slovenia has significantly improved its previous forecast, issued in December 2020, and currently estimates that Slovenia’s economic growth (GDP, real change) will stand at 5.2% in 2021 and 4.8% in 2022, according to their central scenario. They also prepared two alternative scenarios that could happen due to the changes in pandemic infections. In the case of a pessimistic scenario, GDP would grow by 2.9%, and in the case of optimistic expectations by 6.2%. After this year's large increase, commodity prices are expected to stabilize in 2022 and fall by 8% in 2023 (source: ECB). The average basket of prices (HICP) is expected to increase by 1.3% this year, and in 2022 and 2023 by 1.6% and 1.7%. The expected dynamics in investments is particularly interesting. Private investment is expected to increase between 5 and 7% in the period 2021-2023, while public investment is expected to grow by another 13% in 2021, by r 20% in 2022 and by 5% in 2023.

  • In May 2021, 41% more building permits were issued than in the same month last year, when administrative units performed only urgent matters. Compared to May 2019 (before the pandemic), 4% more were issued in May 2021, of which 17% more for residential buildings and 5% less for non-residential buildings. The floor area of residential buildings for which a building permit was issued was 19% higher in the first five months compared to the same period in 2019, while growth in office buildings was slightly negative (-1.2%). The total area of residential buildings accounted for 51.6% and of commercial buildings for 48.4%. Based on these data, we estimate that in the period next year, mainly residential construction of buildings will strengthen, while growth in commercial buildings will be lower. Funds from the Resilience and Recovery Fund are expected to make a key contribution to strengthening construction work in civil engineering projects, but mainly in 2022 and 2023.

On EU-27 

  • Despite widespread production problems, EA-19 industrial production continues to grow. With demand continuing to come in quickly, the outlook for industry remains bright and seems likely to be curbed by supply side constraints. The growth in production was mixed between large markets, which are differently affected by shortages. German production has been significantly disrupted by semiconductor chip shortages as the auto industry is one of the most dominant industries resulting in another decline in overall German industrial production in April. Spain and Italy have continued to see production grow while France saw production stagnate. The outlook for the industry remains bright though. The key concerns for industry are supply chain disruptions, price pressures and whether reopening of services dampens demand for goods. There is not much evidence from business surveys for the latter for now as new orders continue to come in very rapidly despite easing of service sector restrictions.

Must Read of the Week

Comment/Abstract: This monthly report is extended and also includes information about aggregate companies’ financial accounts for 2020, main macroeconomic variables, credit quality as well as potential NPLs that may soon arise due to end of moratorium on credit loans.   


Forecast of the Week

  • Business Climate, Slovenia, June 21 (Statistical Office of RS): 6.2

Comment:  We expect an increase of the ration from 5.6 to 6.2, mainly due to higher optimism within consumers and services sector.


Quote of the Week

“The differences between forecasts are trivial relative to the difference between all forecasts and what happens.” (John Kay)

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