Release date 29 January 2022
Economic climate improved as expected
The economic climate in Slovenia improved slightly in January 2022 (from 5.1 to 5.7), which was slightly less than we expected (growth by 1 index point) but on the basis of other confidence indicators (which are part of the economic climate) as we thought. Confidence in services (by 0.5 percentage points) and retail trade (by 0.1 percentage points) contributed to the increase in the value of the indicator on a monthly basis. Indicators of confidence in manufacturing, construction (we expected the growth of these two) and among consumers had no impact on the change.
The average Decembergross wage (for November 2021) amounted to EUR 2,084.38; compared to the previous month it was 10.5% higher, which was above our expectations (+ 8%). The growth was quite typical, as many businesses typically pay out annual performance fee to their employees. The average net salary amounted to EUR 1,363.86 and was 11.9% higher. In November 2021, 24.9% of all employees who received a salary received an extraordinary payment (or 3.4 percentage points more than in the payment of a salary for November 2020). The average gross amount of the extraordinary payment amounted to EUR 796.88 and was 5.3% higher than in the payment of the salary for November 2020. In the private sector the average gross salary was higher by 13.4%, in the public sector by 5.4%. As the public sector group also includes state-owned enterprises, one should also look only at wages in the general government sector. They increased by 0.5% (public sector employees do not receive any extraordinary payments). Employees in energy and finance received the highest extraordinary payments, as wages in the first sector increased by 26.5% and in the second by 26.1% compared to the previous month. In the private sector, wages in the first 11 months of 2021 were higher by 5.9% compared to 2020, in the public sector by 7.8% (of which in the general government sector by 8.6%).
More economic topics are below in the attachment.
The International Monetary Fund (IMF) made a fresh assessment of world economic projections on Tuesday (January 25th), pointing out new containment measures that limit population mobility due to rising omicron infections, high energy prices and delays in supply chains which generated continuing pressures on rising consumer prices. In addition, restrictions in the Chinese real estate market are expected to contribute to slower growth in Chinese domestic demand, which is expected to limit expectations of global economic growth. The world economy is expected to strengthen by 4.4% in real terms in 2022 (5.9% growth in 2021), which is half a percentage point less than previously thought in October 2021, and is mainly due to lower estimates of growth in USA by 1.2 percentage points (as the Build Back Better infrastructure package has not been approved and was takeon out of the projections) and by 0.8 percentage points in China (due to zero tolerance to covid-19 infections and financial stress in the real estate sector). The euro area is forecast to grow by 3.9% in 2022, down from 4.4% (2021), but on the other hand the IMF raised its 2023 estimate by half a percentage point to 2.5%. For 2023, the forecast for global economic growth was even raised from 3.6 to 3.8%. It is assumed that the mortality rate due to covid-19 infections and its variants will continue to decline sharply due to greater vaccination coverage of the population and more effective treatment of patients. World trade (in goods and services) is expected to increase by 6% in 2022 (+9.3% in 2021), and average price growth in developed economies is expected to rise from 3.1% in 2021 to 3.9 % in 2022. Only in 2023 is CPI growth expected to slow to 2.1%. They see the average price of a barrel of oil at USD 77 (based on futures contracts, they do not use a model), which is much less than the current price on international oil markets (around USD 87). It is also worth mentioning the expectations of a tightening of FED’s monetary policy, which should mean more expensive borrowing by developing countries. The biggest challenges are expected to be countries that have borrowed in dollars to finance their debt. Delays in supplies are expected to last longer in the USA than in Europe or Asia, which means higher inflation in the USA. Another problem is the slow increase in labour participation rate in the United States, where part of the population in the affected sectors has left the labour force and is satisfied with fiscal transfers. This is expected to put pressure on wage growth, but mostly for below-average wage earners.
Summary of macroeconomic developments; Žakelj et al.; Bank of Slovenia; 27 January 2022. Download: https://bankaslovenije.blob.core.windows.net/publication-files/summary-of-macroeconomic-developments-january-2022.pdf
Comment/Abstract: A short report with several useful statistical tables on Slovenia’s economy on a wide array of macroeconomic figures.
Quarterly GDP, EA-19, Q4 2021, (31 January), Eurostat; +0.7% (q-o-q, SA)
Comment: We expect the EU-19 economy to increase by 0.7% q-o-q, which is above the median forecast at Refinitiv (+0.3%).
“There are no facts about the future, just opinions.”
(Howard Marks, Oaktree Capital)
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