Release date 22 May 2022
Slovenia’s Q1 2022 GDP with high growth
Slovenia's GDP in the Q1 2022 was 0.8% higher in real terms than in the previous quarter (seasonally and calendar adjusted), which is a significant slowdown compared to the growth we have been accustomed to since the beginning of 2021. Nevertheless, growth can be described as extremely high, as it followed a 5.3% quarterly growth in the Q4 2021, and such growth is usually followed by a decline. Growth of 0.8% was also higher than in the EU-27 (+0.4%) and four times higher than our estimate (+0.2%). Quarterly growth was high in many European countries (Romania: + 5.2%, Portugal: + 2.6%, Austria: + 2.5%, Poland: + 2.4%, Latvia: + 2.1%) and that shows the March invasion of Ukraine has not yet had a major economic impact. The key reason was the strong growth in the European service sector. Compared to the Q4 2019, Slovenia's GDP was 7.5% higher in real terms but less than half a percent higher in the euro area. According to the expenditure method, Slovenia’s quarterly growth was high due to high rise in gross investment (+12.3%), the growth of which originated both from the growth of investments in fixed assets (buildings, machinery, equipment, intellectual property…; + 6.8%) and from the contribution of inventories (growth in working capital, which reflects the willingness of companies to create larger inventories due to delays in deliveries). Within investments in buildings and structures, the growth of investments in other buildings and structures strengthened (+11.4%), which is a result of the growth of public investments in the field of civil engineering, partly also private ones. Growth in housing investment (+3.8%) was similar to the previous quarter. Investments in transport equipment (+3.8%) and other equipment and machinery also increased (+ 4.1%), while investments in intellectual property products increased relatively more than in previous quarters (+3.6%). Growth in household consumption slowed down (+1.5%), mainly due to a decline in consumption of durable goods (-10%), which is associated with difficulties in supplying new vehicles. Government consumption shrank by 1% due to the expected absence of special fiscal measures that mitigated in the past negative economic effects from covid-19 pandemics. We were disappointed by a 0.8% drop in exports, which stems from a drop in exports of goods (-2.3%). Exports of services on the other hand increased sharply (+5.7%), mainly due to stronger inflows from tourism and transport. Growth in imports was higher (+3%), with imports of goods rising by 2.5% in real terms and imports of services by 3.1%. More in attachment.
The May’s consumer confidence indicator was 4 percentage points (p.p.) lower than in the previous month, which is a negative surprise. On a monthly basis, all four components of this indicator deteriorated: the expectation of the financial situation in the household (-5 p.p.), the expectation of larger purchases (-5 p.p.), the current financial situation of the household (-3 p.p.) and the expectation of economic situation in the country (-2 p.p.). On a monthly basis, the share of consumers who believe that future prices will grow faster (57% of all; +2 p.p.) increased but was lower than in March when it touched recent local highs(68%). Source: Statistical Office of the Republic of Slovenia
More economic topics are below in the attachment.
In the EA-19, the dynamics of trade with non-EA-19 countries deteriorated significantly. In the Q1 2022, exports of goods grew by 17% (EUR 667 m) and imports by 40% (EUR 719 m). The surplus with this group of countries (+ EUR 57 bn in the Q1 2021) turned into a deficit (-EUR 52 bn in the Q1 2022), which was mainly due to high growth in domestic consumption, investment and rising prices of raw materials and energy. By country, the trade balance deteriorated the most with China (by EUR 42 bn to a deficit of EUR 92 bn), Russia (by EUR 35 bn to a deficit of EUR 45 bn) and Norway (by EUR 16 bn to EUR 17 bn deficit). Source: Eurostat
The global electronics PMI rose to its highest level in April (55.4) in the last three months, despite pressure on the supply chain. New orders as well as employment and current production strengthened. The majority of growth was contributed by the industrial electronics segment, while consumer electronics growth was lower. Lockdowns in China and the limited operation of Chinese ports have contributed to longer delivery times. Source: S&P Global
Commodity market disruptions, growth and inflation; Deniz Igan, Emanuel Kohlscheen, Gabriela Nodari and Daniel Rees; BIS Bulletin No 54; 18 May 2022. Available at: https://www.bis.org/publ/bisbull54.htm
Comment/Abstract: Higher commodity prices will erode global growth, as the modest growth boost for commodity exporters will only partly offset the output losses of commodity importers. Rising commodity prices will also intensify global inflationary pressures. The effects will be strongest for food and energy prices, but spill overs to other components of inflation are likely. Recent shocks have been smaller than the 1970s oil shocks but broader based, encompassing food and industrial commodities as well as energy. Nonetheless, structural changes, as well as stronger policy frameworks and nominal anchors, make stagflation less likely to return.
Economic Climate, Slovenia, May 2022, (25 May), Statistical Office of RS; 0.0 (-1.5 index points)
Comment: Consumer confidence declined unexpectedly in May and we expect the manufacturing sector to reduce its optimism a bit as well. Services, construction and retail should remain confident about its near term prospects. Nevertheless we expect the economic climate index to drop a bit, by 1.5 p.p.
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