Release date 6 September 2021
Improving exports of goods in final months of 2020 but a reduction of 10% on a yearly level likely
November data on exports (1 week ahead of Eurostat release) from Slovenian Statistical Office shows that trends have improved in final months, what was expected based on improving sentiment in manufacturing as well as anecdotal data from main companies. Y-o-y change (Nov. 20/Nov. 19) was positive (+0.9%; +EUR 30 m), for both group of markets (exports to EU: +EUR 20 m and exports to non-EU: +EUR 10 m). One must be careful by interpreting the headline figure for 11 months (-2.7% y-o-y) as the change severely underestimates the reduction of exports which is due to one-off increase in distribution of drugs of one bigger pharmaceutical group with operations in Slovenia and the region. Specific company’s decision on distribution of foreign produced drugs through Slovenia namely led to 93% increase in exports to Switzerland (as well as corresponding increase of imports from several other states). We therefore advise our readers to focus on the export trends to EU-27 markets or to the data from Balance of Payment, that are due to be released next week (13th of January, Bank of Slovenia). The exports to EU-27 in the first 11 months were down 10%. The main reduction in value terms can be explained by the fall of exports to the following main trading partners (note: individual country data is available only for 10 months of 2020): Italy (-EUR 800 m; -24%), Germany (-EUR 550 m; -10%) and Croatia (-EUR 250 m; -10%). From the other important trading partners, exports fell relatively a lot to UK (-18%) and Spain (-18%). On the bright side, the exports increased to Netherlands, Denmark, Canada, Saudi Arabia and Australia by EUR 20-30 m to each country individually, although there are more or less one-off trading businesses patterns explaining this trends.
Global Manufacturing Sentiment Index, measured by J. P. Morgan stood at 10-year high in December (53.8), a level similar to November, what implies that manufacturing value chains are retaining optimism with regards to future outlook. This is also due to pent-up effect arising from “lost” months of production between March and May 2020. Nevertheless, several complex industries (automotive and electrical) point out to weak availability of inputs (semiconductors, basic materials). Optimism was highest among industrial groups in Brazil, Taiwan, Germany, Netherlands, Canada and UK. French manufacturing companies were on the other side of the scale (small positive outlook), mainly due to their structure of their export business (more long-term projects). Pessimism was noted in a small number of countries, most notably in Mexico and Greece.
Comment/Abstract: Influence of pandemic on solvency and liquidity of Slovenian corporate sector; risks are tilted to SMEs, holdings, service sector .
Nov. industrial production in Slovenia: +0.0% y-o-y (previous month: -1.1%)
Comment: we expect the recovery of manufacturing will continue at least until first quarter 2021.
“The only function of economic forecasting is to make astrology look respectable.” (John Kenneth Galbraith)