Release date 3 August 2021

In the Q2 21, GDP growth in the EU-27 exceeded expectations, in the US below

On Slovenia's Economy

• According to the latest data from the New York Times, the number of vaccinations in the world has increased by 7.5% to 3.97 billion (52 doses per 100 people) in the last week. In Slovenia, the share of vaccinated people with two doses increased by 1 percentage point to 38%, which is less than in comparable countries. More at: https://www.nytimes.com/interactive/2021/world/covid-vaccinations-tracker.html We expect that easier access to vaccines and a broader promotional campaign will gradually increase the share of vaccinated persons in Slovenia, in addition to some restrictions related to the consumption of certain services (PCT condition). The traffic of lorries on Slovenian motorways was also relatively high in mid-July 21 and at a comparable level as in the same period in 19. With gradually increasing activity in the tourism, electricity consumption approached the level from the same period in 19 (2% below). Compared to the comparable week in 19, most Slovenian trading partners recorded the same (Germany) or higher electricity consumption (Austria and Italy by 2%, Croatia by 6%), except for France (-6%).

• Sales in predominantly market service activities (Nace 49-82) was 10.6% higher year on year in the first five months of 21 (compared to 19: -3.4%), and 0.2% higher in the last 12 months. Compared to the comparable period in 19, sales growth was highest in advertising and market research (+ 32%), postal and courier activities (+ 26%), business and management consulting (+ 22%) and computer programming (+19%). Growth was also high in architecture (+ 15%), security (+ 14%) and real estate (+ 12%). Growth was thus high in activities where containment measures had a positive impact on business (directly or indirectly) or where it was possible to perform work remotely (from home). The sectors with a larger drop in revenue during this period were travel agencies (-90%), catering companies (-62%), film and video production companies (-27%) and employment services companies (-18%). In these activities, containment measures had a significant impact on lower turnover, while the importance of outsourced workers decreased in employment activities.

On European Economy

• GDP in the EU-27 increased by 1.9% in the Q2 21 compared to the Q1 21 (in the EA-19 by 2%, Reuters Consensus: +1.5%), which was more than we expected (1.4%). Among the 11 countries for which data are already available, the highest growth was recorded in Portugal (+ 4.9%, where, by the way, the fall in GDP was high in the Q1 21, at -3.2%) and in Austria (+4.3%). Growth was also high in Latvia (+3.7%) and Spain (+ 2.8%). GDP in Europe's largest economy - Germany, strengthened by 1.5% (after a 1.8% drop in the 1st quarter of 2021), growth in France was disappointing (0.9% after unchanged growth in the Q1 2021). Growth was high, especially in more service-oriented economies, where the withdrawal of containment measures had a significant impact on high economic growth. Prices in the EA-19 (HICP methodology), on the other hand, increased by 2.2% in June 21, which was above the consensus of analysts at Reuters (2.0%) and above our expectations as well (2.1%). In Slovenia, they increased by 2%.

Must Read of the Week

• Learning from Tumultuous Times - An Analysis of Vulnerable Sectors in International Trade in the Context of the Corona Health Crisis; WiiW, Reiter O.; Stehrer R.; available at (free download): https://wiiw.ac.at/learning-from-tumultuous-times-an-analysis-of-vulnerable-sectors-in-international-trade-in-the-context-of-the-corona-health-crisis-p-5882.html

Comment/Abstract: In this paper authors assess which products can be considered as vulnerable to trade shocks at the global level by constructing a ‘product riskiness indicator’ for 4700 globally traded products based on components such as market concentration, clustering tendencies, network centrality of players, or international substitutability. In a second step the bilateral imports of risky products are matched to multi-country input-output tables enabling the analysis of the importance of internationally sourced risky products by country and using industries. Higher-tech industries are more prone to supply-chain vulnerability given the large share of risky products in high-tech product categories. In the next step they apply a ‘partial global extraction method’ to assess the GDP impact of reshoring. Assuming that imports of risky products are re-shored from non-EU27 to EU27 countries suggests an increase in the EU27 GDP of up to 0.5%. The non-EU27 countries lose from such re-shoring activities accordingly. This suggests that it is also in the interest of the supplier countries and industries to assure robust or at least resilient supply chains.

Forecast of the Week

• Construction PMI, EA-19, July 21 (IHS Markit): 50.7

Comment: We expect a gradual pick-up in construction activity in following months led by pre-financing of EU projects (infrastructure) and construction of residential buildings.

Quote of the Week

“No one can forecast the economy with certainty.”
(Jamie Dimon)