Release date 13 June 2022
Growing challenges of rising energy and raw material prices for domestic businesses
First estimates on the performance of private sector in theQ1 2022 showed that companies were not able to fully transfer higher prices of raw materials and energy into final prices, as gross margin decreased by 3 percentage points q-o-q to 22% (measured as share of value added in sales). It was at this level in 2018. In mining (-8 p. p.), energy (-10 p. p.) and in service activities (finance, professional, scientific and technical activities, healthcare), the declines were the largest. In manufacturing and trade, two sectors that otherwise generate the highest nominal added value and employ the most people, the gross margin fell by 1 p. p. Accounting for this fact it may sound odd how Slovenia’s was able to record positive GDP growth in the Q1 2022. This can be explained by high sales growth, which stems from price growth, which rose nominally much more than value added. But despite that real value added increased, albeit at lower pace. Despite the decline in gross margin, the share of labor costs in value added fell further (to 57% from 58% in the previous quarter), which means that labor costs grew more slowly than value added. The mentioned data does not provide other, quantitatively useful data. Source: Statistical Office of the Republic of Slovenia
In April there were 4.3% fewer registrations of new companies on a monthly basis and 25.4% more on an annual basis. There were also 12% more than in 2015. After the increase in bankruptcies in March, there were again fewer of them in April: 27.4% less m-o-m, 23.9% less y-o-y and 19.5% less than the 2015 average. Source: Statistical Office of the Republic of Slovenia
More economic topics are below in the attachment.
This week, the ECB and the OECD revealed their most current forecasts. For the euro area, the ECB forecasts 2.8% economic growth in 2022, followed by another 2.1% in 2023 and 2024. The average annual inflation rate is now 6.8% for the current year and for the next two years at 3.5% and 2.1%. The 3-month Euribor, which now stands at -0.3%, is expected to grow to 1.3% in 2023 and to 1.6% in 2024. When forecasting inflation, it should be noted that these were made at a time of lower oil prices and did not take into account the rise in futures contracts, which rose again, which means that the potential for short-term inflation increased due to this effect. Source: ECB
The construction PMI in the euro area fell below 50 in May for the first time in nine months, signalling a slights contraction in construction activity. This is also far worse than our expectations, as we expected the indicator to grow to 52.1. The drop in sentiment is explained by higher raw material prices and delays in the supply of materials. For the first time since February 2021, construction activity in housing also declined moderately. Activity in business construction decreased the most, the fastest after April 2021. New orders fell for the second consecutive month. Employment has largely remained the same. Source: S&P Global
A new era in the economics of fertility; Matthias Doepke, Anne Hannusch, Fabian Kindermann, Michèle Tertilt; 11 June 2022. Available at: https://voxeu.org/article/new-era-economics-fertility
Comment/Abstract: As fertility rates have declined in high-income countries, the cross-country relationship between women’s labour supply and fertility has reversed Today, in countries where more women are working, more babies are born. This article suggests that classic models of fertility no longer explain ultra-low fertility rates in high-income countries, where the compatibility of women’s career and family goals are now a key driver of fertility decisions. The authors highlight four factors that facilitate combining a career and childbirth: family policy, cooperative fathers, favourable social norms, and flexible labour markets..
Exports of services, Slovenia, April 2022, (14 June), Statistical Office of RS; EUR 890 million
Comment: We expect the exports of services to improve further in April (by one tenth compared to March), reflecting high increase in number of foreign guests as well as sound performance of domestic logistic sector.
“But what is liberty without wisdom, and without virtue? It is the greatest of all possible evils; for it is folly, vice, and madness, without tuition or restraint.”
(Edmund Burke)