Release date 8 April 2022
The service part of the economy continues with high growth
February’s exports of goods amounted to EUR 3.6 billion, up 18.7% year on year. This figure matched our forecast. High import growth is also not slowing down. Goods worth EUR 4.2 billion were imported, which was half as much year on year. For the second consecutive month, there was a large trade deficit in goods, this time in the amount of EUR 0.6 billion, and in the first two months a total of EUR 1 billion. Slovenia exported about two thirds of all goods in February 2022 to EU countries, while at the same time importing slightly less than two thirds of all imports of goods from these countries. The value of goods exported to these countries amounted to EUR 2.4 billion, or 21.0% more than in February last year. The value of imports from these countries amounted to EUR 2.6 billion, which is 32.4% more on an annual basis. Slovenia's trade with other non-EU- countries was higher than in February 2021. Slovenia exported goods worth EUR 1.2 billion (or 14.2% more) to this group of countries and imported 1.5 billion euros (or 95.7% more). Regarding the high growth rate of imports of goods from non-EU countries, it should be noted that the value of imports from these countries was the lowest last year in February, as population mobility was lower due to containment measures. It should be noted that EUR 0.5 billion in exports and EUR 0.7 billion in imports from non-EU countries (mostly Switzerland) are "processing" transactions, which means lower value added on part of this exports as these are mostly medicines which are produced outside Slovenia and are only added some labeling in Slovenia and are then re-exported. Source: SORS.
In February there were 2.3% fewer registrations of legal units (one sixth more at the annual level) and 23.9% fewer bankruptcies than in the previous month (31% less at the annual level). These data show that economic growth is broadly based and that the liquidity in the economy is still above average. Source: SORS.
More economic topics are below in the attachment.
The composite PMI in the euro area (the survey was conducted between 11 and 28 March) fell slightly in March (from 55.5 to 54.9). The service part of the economy, on the other hand, still experienced increased demand, as the services PMI remained high (slight increase from 55.5 to 55.6). In the European services sector, growth was highest in France (up from 55.5 to 57.4) and in Germany (up from 55.8 to 56.1), while in Italy it fell from 52.8 to 52.1. Input price inflation was more pronounced in Italy than elsewhere, as the service part of the economy is also slightly more tied to the price of natural gas. New orders rose moderately in March, while new orders in the manufacturing sector in export markets declined (the first since November 2020), mainly as a result of the invasion of Ukraine, which affected lower demand for European goods in Ukraine, Russia and Belarussia. The costs of inputs and energy rose sharply in March, but companies were relatively successful in translating higher prices into rising prices of products and services. Among the major euro area countries, the PMI was highest in Ireland and France. It fell slightly in Germany, Spain and Italy, but remained above 52 in all of these countries, indicating expansion. Despite deteriorating business expectations due to the invasion of Ukraine, employment has increased the fastest in the last 4 months. For the 13th consecutive month, the stock of unfinished works increased. In April, we expect deteriorating purchasing conditions due to new delays in deliveries, which are particularly acute for the automotive and electronics industries. It will be also more clear to assess the extent to which consumers can still tolerate price increases. Source: S&P Global.
In February the prices of manufactured goods on the domestic market in the euro area increased by 1.1% in industry (comprises mining, manufacturing, and energy) and by 0.9% in manufacturing. In February, the prices of raw materials and energy did not rise as much as in March. Prices of durable goods increased by 0.6% (year on year: +7.2%), non-durable goods by 0.8% (year on year: +6.8%), capital goods by 0.3% (year on year: +5.9%) and intermediate goods by 1.6% (year on year: +21%). Source: Eurostat.
Major steel consumers slowed their purchases in March, lowering the PMI from 51.5 to 50.3. Asian companies were most affected, with a slight drop in production in Europe (the first in 21 months), while optimism in the U.S. rose to its highest level in 8 months. New orders fell for the second month in a row, but the decline was moderate. The order book fell slightly to its lowest level in 13 months but remained above historically trend. Due to the lack of supplies, purchases fell for the first time since June 2020. The trends for large consumers of copper and aluminium were quite similar. Source: S&P Global.
What if Germany is cut off from Russian energy?; Rüdiger Bachmann, David Baqaee, Christian Bayer, Moritz Kuhn, Andreas Löschel, Benjamin Moll, Andreas Peichl, Karen Pittel, Moritz Schularick; voxEU; 25 March 2022. Available at: https://voxeu.org/article/what-if-germany-cut-russian-energy
Comment/Abstract: Germany depends on Russia for about one-third of its total energy consumption. If it is cut off from Russian energy imports, Germany will need to compensate through alternative supply sources, fuel shifting and economic reallocation, or demand reduction. The macroeconomic fallout would depend on how much the production structure can adjust and how substitutable the imports from Russia are by imports from other suppliers. This article shows that the effects of an estimated 30% shortfall of gas supplies are likely to be substantial but manageable, with a GDP decline in the range of 0.5% to 3%.
Industrial production in manufacturing, Slovenia, February 2022/January 2022, seasonally adjusted, (11 April), Statistical Office of RS; +1.5%
Comment: After a 0.9% drop in January’s production in manufacturing, which was also due to strong December, we expect a pick-up in growth in February, mainly due to positive PMI data for that month.
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