Weekly Economic Highlights: Stronger receipts from foreign tourists

21.6._2022_Weekly Economic Highlights

Datum izdaje 21. junij 2022

Stronger receipts from foreign tourists

On Slovenia's Economy

  • Exports and imports of services increased by about a third y-o-y in the first four months of 2022. Among the most important groups of services, exports of travel (+EUR 390 m), transport (+EUR 205 m), other business services (+EUR 95 m; intellectual services) and telecommunications, computer and information services (+EUR 64 m) increased the most. Exports of construction services remained unchanged. The trade surplus amounted to EUR 857 m, which was EUR 186 m more y-o-y. The surplus of travel increased the most (by EUR 145 m). The highest surplus within groups of services was achieved by transport (EUR 436 m) and travel services (EUR 246 m). In April 2022 only, the surplus of services amounted to EUR 291 m, which is EUR 118 m more than in April 2021. Exports increased by 37.3% and imports by 24.7%. The key to the growth of the surplus was the growth of exports, related to travel (consumption of foreign tourists in Slovenia). Statistical Office of the Republic of Slovenia

  • Construction costs for new dwellings in the Q1 2022 were 5.8% q-o-q. The costs of construction materials were 5.3% higher. They have risen for the sixth consecutive quarter. Labor costs in the construction of new dwellings were 6.5% higher q-o-q, after a 7.2% decrease in the previous quarter. Y-o-y growth in construction costs stood at 14%, with material costs rising by 24% and labor costs rising by 5.3%. Growth in labor costs lags the growth in gross wages in construction and is probably underestimated as this data is based on survey, which is not adjusted for calendar or season. Source: Statistical Office of the Republic of Slovenia

  • More economic topics are below in the attachment.

On World Economy

  • April's industrial production in the EU-27 increased slightly (+ 0.3%) but was at a similar level (slight decline: -0.5%) as in last year. At the monthly level, growth was highest in energy production (+1.6%), while it was also high in non-durable consumer goods (+0.9%). The change in the production of semi-finished goods, capital goods and durable consumer goods was slightly negative. The Netherlands, Finland and Luxembourg recorded the largest monthly growths (3 to 6%), while Ireland, Greece and Lithuania recorded the largest declines (7 to 10%). At the annual level, the decline in production of capital goods (machinery and equipment) stood out (-7.5%). The production of non-durable consumer goods, on the other hand, was higher by 7.5%. Source: Eurostat

  • The vacancy rate in the EU-27 in the Q1 2022 was 2.9%, which was more than in the same period of the last year (2.0%). In Slovenia it was 3.2%. It was highest in the Czech Republic (5.3%), the Netherlands (4.9%) and Belgium (4.8%). Source: Eurostat

  • More economic topics are below in the attachment.


Must Read of the Week

  • Macroeconomic projections for Slovenia; Bank of Slovenia; June 2022. Available only is SI for now at: https://bankaslovenije.blob.core.windows.net/publication-files/napovedi-makroekonomskih-gibanj-junij-2022.pdf

Comment/Abstract: The cut-off date for data, that was used as input for this forecast is 20 May 2022 what implies that it includes all the uncertainties regarding Ukraine. Quite surprisingly, the growth estimate for Slovenia improved by huge margin as BS teams expects real GDP growth to rise by 5.8% in 2022 followed by 2.4 and 2.5% in 2023 and 2024. Putting this into historical perspective, when GDP growth averaged only 2.1% (2012-2021), this does not sound bad. Average price growth (measured as HICP) is expected to stand at 9.0% in 2022 (far above the central estimate), 4.5% in 2023 and 2.3% in 2024. Based on this scenario, ECB would be very hawkish (increasing the central rate very fast) if thinking only about Slovenian economy as the employment hit record high and current GDP is more than 7% above Q4 2019. A big benefit of this report is a description of a negative, shock scenario, where GDP growth in 2022 would still be high (at 4.3%, mainly due to the effect of transmission of growth from Q4 2021 into 2022) and in 2023, a mild recession would follow (-0.4%). In 2024, a rebound of growth at 3.6% would happen.

Forecast of the Week

  • Economic Sentiment Index, Slovenia, June 2022, (24 June), Statistical Office of RS; 1.5 (2.9 in May)

Comment: We expect the ESI to drop slightly, mainly due to reduced sentiment among consumers and retail sector. This is due to high inflation as well as winding down on part of the support measures to counter the large rise in energy prices.                


Quote of the Week

“The most important question in 21st-century economics may well be, 'What should we do with all the superfluous* people, once we have highly intelligent non-conscious algorithms that can do almost everything better than humans?”

(Yuval Noah Harari)

*Expendable, not needed

Please see the enclosed attachment