Release date 25 March 2022
Real economy in March less worried than initially expected
After four consecutive months of growth, the economic climate in Slovenia decreased by 5.2 percentage points in March 2022, which was mostly in line with our expectations (-5.6). It remained higher at the annual level by 2 percentage points. The monthly change was negatively affected by lower values of consumer confidence indicators (by 2.5 percentage points) and in manufacturing (by 2.3 percentage points). The impact of lower confidence in services was milder (by 0.5 percentage points), while the impact of the confidence indicator in retail trade was positive (by 0.1 percentage point). The confidence indicator in construction had no impact on the change.
The value of construction works in January 2022 was higher by 14.8% on a monthly basis (in real terms, seasonally adjusted), which was significantly above our expectations (+3%) and was followed by a 2.2% drop in December 2021. The value of construction works on buildings was higher by 30.0%, while on residential buildings it was higher by 17.7% and on commercial buildings by 26.3%. The value of construction works on civil engineering also increased (by 16.4%), while the value on specialized construction works decreased by 0.4%. The value of construction works in January 2022 was up by 5.8% y-o-y. However, only the value of construction works on civil engineering was higher (by 10.0%), while the value of construction works on buildings (-4.4%) as well as on specialized construction works were lower (-3.0%).
More economic topics are below in the attachment.
In March, ECB staff estimated that economic growth in the euro area would slow to 3.7% in 2022 and to 2.8% in 2023, similar to our estimates (3.5% in 2022 and 2.8% in 2023). In a negative scenario, growth in the euro area would slow by another 1.2 percentage points to 2.3%. This would be in line with extended deadlines for the delivery of goods, the extension of sanctions and the reduction of production in certain sectors. The catastrophic scenario envisages even higher growth in energy prices and would reduce real growth by 1.4 percentage points to 2.1%. In no scenario does the ECB see the possibility of a recession. The average annual inflation in the euro area in 2022 is expected to be at 5.1%, in the case of negative scenario 5.9% and in the case of a catastrophic one 7.1%.
The S&P Global PMI Commodity Price & Supply indicator showed that value chain challenges were very high due to late deliveries and high prices in February. The number of manufacturing companies reporting higher energy prices was the highest since the beginning of these reports (January 2005). Energy prices rose 10 times more than usual, what last happened in July 2008 (8.6 times). Price pressures were still high for semiconductors, 28 times higher than usual. Reports of supply shortages were 5.8 times higher than usual, which was though lower than at the June 2021 peak (9). The two key challenges were congestions and delays of operations in ports and freight and the lack of semiconductors.
Durable goods orders fell 2.2% in the USA in February 2022, the first monthly drop in last five months. The decline was much larger than expected by analysts at Refinitiv (-0.5%). Large orders for aircraft and vehicles contributed to the decline. Orders for durable goods, excluding transport and military technology, fell far less, by 0.3%.
Better pensions for the European Union’s self-employed; Rebecca Christie, Monika Grzegorczyk and Diane Mulcahy; Bruegel; 24 March 2022. Available at: https://www.bruegel.org/2022/03/better-pensions-for-the-european-unions-self-employed/
Comment/Abstract: Self-employed workers are taking on a larger role in the European economy, particularly workers who operate as independent contractors rather than as small-business owners with their own workforce. Becoming self-employed offers flexibility and entrepreneurial potential, but can limit access to state-sponsored pension schemes. Authors assess the current state of pension policy across the EU and take a more detailed look at five countries to see how independent workers are treated compared with their traditionally employed counterparts. They consider how policymakers might adjust or even overhaul their pension offerings to improve opportunities for the self-employed, while being mindful of the broader policy context in areas like innovation and overall tax burdens. Governments can make programmes more widely available, more consistent for all types of work and easier to understand and take part in. Companies can be encouraged to make pension contributions for all their workers, not just those they hire full-time. Individuals can be encouraged to set aside more for retirement with tax incentives, benefits flexibility and other policy measures.
CPI, Slovenia, March 2022, (31 March), Statistical Office of RS; 6.5% y-o-y
Comment: We expect the CPI to remain flat m-o-m, mainly due to reduction in network charges in electricity prices as well as a cap in fuel prices. This would imply a drop from 6.9% inflation in February which was already far above our estimates.
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