Release date 19 December 2021
Prospects for CPI growth in Slovenia in 2022 and 2023 rising above 2%
December estimates of economic growth (GDP) for Slovenia (compiled by Consensus Economics) for 2021 strengthened despite the weak growth in the Q3 2021 (they rose for FY from 6.0% in November to 6.3% in December, which is also our central estimate). In the latest issue of the Slovenian Economic Mirror, IMAD estimated that economic growth in 2021 is likely to be 0.5 to 1 percentage point higher than its own autumn estimate (therefore between 6.6% and 7.1%). On the other hand, the average estimate of independent contributors for GDP growth for 2022 decreased slightly (from 3.9% to 3.8%, our estimate: +4.4%, December OECD estimate: +5.4%). Adjustments for inflation were not minor. The average inflation estimate (CPI) rose from 1.6% to 1.8% (for 2021) and from 2.1% to 2.4% (for 2022). In 2023, average inflation is expected to be 2.1% (previous month's estimate: 2.0%). Expectations in industrial production remained unchanged (growth at + 4.8%; our estimate: +3.8%).
Number of persons in employment in Slovenia was higher by about 5,400 persons (911,800) in October (compared to September), which was even slightly above our expectations (911 thousand). Of this total, the number of employed persons increased by 5,000 and the number of self-employed persons (mainly sole proprietors) by 400. For the second time in the raw the number of persons in employment reached a new high since the Statistical Office of the Republic of Slovenia monitors register data on the working population. In the ten years from October 2011 to October 2021, the number of persons in employment increased by more than a tenth (by 10.6%). In October, the number of persons in employment decreased on a monthly basis in five sectors and increased in fifteen. Nominal increase was highest in manufacturing (+1,630), construction (+680; given this trend, the decline in construction works is even more incomprehensible), professional, scientific, technical activities (+660), trade (+580) and ICT (+360). In the predominantly public sector (education, health, public administration) the number of people in employment increased by 1,300 (24% of total increase).
More economic topics are below in the attachment.
According to the International Monetary Fund (IMF), global debt increased to 226 trillion dollars in 2020 or to 256% of world GDP. Compared to 2019, it increased by 28 percentage points. Half of the growth is represented by additional government borrowing (global public debt is at 99% of GDP), while corporate debt (98% of GDP) and household debt (58% of GDP) also reached record levels. Developed economies and China contributed 90% to the growth of total public debt in 2020. The key reason was the low interest rates provided by their central banks and well-functioning financial markets. The high economic rebound in 2021 is likely to contribute to much lower debt-to-GDP growth in 2021. Public debt thus represents 40% of global debt, the highest share since 1960. The two key upward spikes were in 2007 (global financial crisis) and in 2020 (pandemics). High debt is problematic because it gives countries less room for manoeuvre in promoting recovery (due to higher interest expenditure) and reduces the ability of the private sector to invest. That is why the question of how quickly central banks will reduce stimulus measures is very important in 2021, which should have an impact on raising long-term and short-term interest rates.
Current developments in material supply and supply chain problems in the German economy; Leiss Felix, Wohlrabe Klaus; ifo Institut, München, 2021; ifo Schnelldienst digital, 2021, 2, Nr. 19, 03-07; available only in German language, free download at: https://www.ifo.de/en/publikationen/2021/article-journal/aktuelle-entwicklungen-bei-materialengpassen-und-lieferproblemen
Comment/Abstract: This short report offers an overview within 6 main sector groups in Germany as well as specific manufacturing sectors. Economists from ifo claim this explains a stagnation in economy in second half of 2021. By 2022 these challenges should be overcome, but not with same speed and price pressure will materialize consequently.
Residential real estate prices, Slovenia, Q3 21/Q2 21 (Statistical Office of RS); +2.5%
Comment: In the Q3 2021 we expect a slowdown in growth of residential real estate prices as quarterly rise in Q2 21 was high (+4.5%).
“I don't bother to read most economists (particularly those who insist on being called Dr. Sam or Dr. Eric) and strategists because they tell you only about what has happened, not what will happen. They don't forecast, they just extrapolate recent events into the future. They are mostly followers, who revise their forecasts of the future based on the direction of the latest economic numbers or what markets have done recently.” (Barton Biggs)