Release date 10 July 2022
China boosting again the global output
Life necessities purchased by Slovenian consumers (CPI Index) were 10.4% more expensive in June, which was the highest growth since June 1996 and above our estimate (10.1%). The prices of goods were on average higher by 13.1%, and the prices of services by 5.3%. Daily consumption goods rose in price by 16.5%, durable goods by 10.5% and semi-durable goods by 2.9%. Higher prices for electricity, gas and other fuels (2.1 percentage points) contributed the most to the overall rise in prices on an annual basis. The price of gas rose by almost half, thermal energy by 44% and electricity by 28%. This was followed by higher prices of petroleum products and a 12.8% increase in the price of food; each of these two groups raised inflation by 1.9 percentage points. The prices of liquid fuel rose by 54.6%, while the prices of fuels and lubricants for passenger vehicles rose by 34.5%. Among food, the prices of bread and cereal products (by 16.2%) and meat (by 12.9%) stood out. Services from the communication group were cheaper than a year ago (by 5.3%) and moderated the annual level of inflation by 0.2 percentage points.
The positive trends of Slovenia's trade in goods with the world continued and even strengthened in the month of May. According to the data of the Statistical Office of RS (data on trade measured by the balance of payments will be available on July 14), exports in May were up y-o-y by almost half (27% in the first five months), and imports by 57% (in the first five months by 49 %). In May, Slovenia thus imported EUR 560 million more goods than it exported (electricity is also a trading goods), EUR 2.7 billion in the first five months. High growth in imports is the result of high growth in prices, growth in domestic consumption and investments, growth in trade flows, and also growth in exports of Slovenian manufactured goods. Source: Statistical Office of RS
More economic topics are below in the attachment.
J.P. Morgan Global Composite rose as expected in June (from 51.3 in May to 53.5), largely driven by an increase in manufacturing in China as the bulk of containment measures were lifted in Shanghai. PMI ex. China dropped from 53.9 to 53.1. World production thus increased in June after the decline in April and May. Growth in the service sector was the highest in the last four months. Growth was faster in business services and consumer goods manufacturing, while it moderated in consumer services. In Brazil, India and China, the value of the indicator was the highest (among the 14 large world economies), while its value strengthened the most in Japan, the United Kingdom and Brazil. The Chinese and Russian economies are recovering, while growth has slowed in all other economies. New orders rose for the slowest time since July 2020, while new export orders contracted for the fourth consecutive month. Source: S&P GlobalThe 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
Global electronics PMI showed lower growth outlook as it slipped to a 20-month low (53.7) in June, which was mainly a result of weaker demand growth. Business conditions thus still indicate growth, new orders are still increasing, but at the latest after September 2020. Current production increased slightly in June. Production costs are still rising sharply. Source: S&P Global
How rate increases could impact debt ratios in the euro area’s most-indebted countries; Grégory Claeys and Lionel Guetta-Jeanrenaud; Brugel Blog Post; 5 July 2022. Available at: https://www.bruegel.org/2022/07/how-rate-increases-could-impact-debt-ratios-in-the-euro-areas-most-indebted-countries/
Comment/Abstract: Despite rising interest rates, the implicit interest rate paid by countries on their debts (ie total interest payments divided by the total debt at the end of the previous year) should rise more gradually because much of the current debt that will prevail in coming years was issued in the low interest environment of the last decade. The only scenario in which the implicit rate increases quickly is that in which countries would face a spread similar to that at the peak of the euro crisis. However, this is a very strong assumption because this means that countries would face for six years a scenario that, even during the euro crisis, they faced for only a few months. This very strong assumption is slightly counterbalanced by the fact that for this scenario authors don’t use the market rates at which bonds were exchanged, but the highest coupons that countries had to offer to sell their bonds at auction during the crisis. Given the tough conditions some of these countries faced at the time – sometimes even losing market access – this seems like a better proxy than peak market rates that result from panic sales at the worst point of the crisis.
Industrial production, Slovenia, May 2022, (11 July), Statistical Office of RS; +0.2% (+0.4% in April/March)
Comment: We expect a slowdown mostly due to weaking trend in manufacturing (92% of industrial production), most notably in materials industry. Consumption of natural gas namely already declined in May supporting our view that drop was attributable by the mentioned sector.
“The best measure of inflation is what is happening with commodity prices”
(Stephen Moore)