The total value of industrial production was higher for the fifth month in a row. In December 2021 it was higher by 1.1% compared to November. It was higher in manufacturing and mining (by 1.1% and 16.0%, respectively) and lower in electricity, gas and steam supply sector, mainly due to poorer hydrology (by 2.4%). Growth surprised us, especially after the already strong growth in November (+ 2.8% compared to October, based on seasonally adjusted data) and compared to the usual situation in this month in the last few years. We expected a moderate, 0.3% drop. Compared to the level of industrial production in December 2020, it was higher by 11.9% and compared to December 2019 by 10.3%. Despite the growth of production in manufacturing (+1.1% compared to November), turnover in December decreased by 0.5%, which is related to the higher growth in stocks of finished products.

In January 2022, consumer price growth in the euro area (HICP methodology) increased more than expected (median change on Reuters: +4.4% compared to January 2021), that is by 5.1% (in December prices were up by 5% year on year). Our forecast was among the most accurate among the 41 institutions (5.2%), despite being the highest. The central assessment did not record such a large error for a long time (institutions submitted forecasts until 26 January 2022), which is due to significant differences in the models of transferring raw material and energy prices to final prices of goods and services. In January 2022, year-on-year price growth was highest in Lithuania (+12.2%), Estonia (+11.7%), Slovakia (+8.5%) and Belgium (+8.5%).

The economic climate in Slovenia improved slightly in January 2022 (from 5.1 to 5.7), which was slightly less than we expected (growth by 1 index point) but on the basis of other confidence indicators (which are part of the economic climate) as we thought. Confidence in services (by 0.5 percentage points) and retail trade (by 0.1 percentage points) contributed to the increase in the value of the indicator on a monthly basis. Indicators of confidence in manufacturing, construction (we expected the growth of these two) and among consumers had no impact on the change.

After the November’s (USD 80.8) and December’s (USD 74.3) fall in oil prices, it became clear that this was a temporary situation. The price of a barrel of Brent oil has risen above USD 88 per barrel, to the highest value in seven years, which is close to our estimate for the average of the year (USD 85), while the majority of institutions estimated a few months ago that the price will fall to around 70 to 75 USD. The acceleration in price was due to an attack on storage facilities in the United Arab Emirates. Geopolitical tensions in Eastern Europe and concerns about sufficient spare capacity in OPEC countries have also contributed to the high rise. Rising oil prices will once again contribute to rising year-on-year inflation in all countries.

The total value of industrial production in Slovenia in November 2021 was 2.8% higher than in October 2021, which was significantly higher than we expected (no change compared to October). It was higher in manufacturing and mining (by 3.2% and 2.6%, respectively), and lower in energy (by 2.9%), mainly due to poorer rainfalls. Compared to November 2020, it was higher by 10.1% and compared to November 2019 by 8.7%.

According to first estimate, Slovenia exported goods worth EUR 3.7 billion in November 2021, which was almost a quarter more than in the same month last year. In the first 11 months of the past year, growth was 19% (relative growth was the same in EU countries as in other countries), but of course the nominal increase in exports on the EU market was correspondingly much higher. In the autumn forecast, we estimated that the growth of exports in 2021 will be 12%. In same month, EUR 4.17 billion worth of goods were imported (26% more).

December estimates of economic growth (GDP) for Slovenia (compiled by Consensus Economics) for 2021 strengthened despite the weak growth in the Q3 2021 (they rose for FY from 6.0% in November to 6.3% in December, which is also our central estimate). In the latest issue of the Slovenian Economic Mirror, IMAD estimated that economic growth in 2021 is likely to be 0.5 to 1 percentage point higher than its own autumn estimate (therefore between 6.6% and 7.1%). On the other hand, the average estimate of independent contributors for GDP growth for 2022 decreased slightly (from 3.9% to 3.8%, our estimate: +4.4%, December OECD estimate: +5.4%). Adjustments for inflation were not minor. The average inflation estimate (CPI) rose from 1.6% to 1.8% (for 2021) and from 2.1% to 2.4% (for 2022). In 2023, average inflation is expected to be 2.1% (previous month's estimate: 2.0%). Expectations in industrial production remained unchanged (growth at + 4.8%; our estimate: +3.8%).

Global sector PMI in November remained relatively high. 19 out of 21 sectors recorded business growth. Activity in finance (insurance companies, other financial institutions, excluding banks), transportation, industrial services and software development, banks and the production of technological equipment strengthened the most. The decline was present in the metals and minerals sector and in the automotive and auto parts industries, but the decline in the latter was relatively small. Price pressures continued to be high globally. They were particularly high for input prices in technological equipment, building materials, the chemical industry and the paper industry.

Confidence indicators in manufacturing (+2 percentage points compared to October) and retail trade (+7 percentage points) in Slovenia increased in November, while in construction (-1 percentage points) and services (-1 percentage points) they decreased. The economic sentiment index (ESI) was thus 0.8 percentage points higher in November than in October, which is higher than our expectations (we expected a drop of 1.7 percentage points). It was also higher than the long-term average (by 4.4 percentage points).

Compared to August, the value of construction works (in real terms) rose more than expected in September (+0.9% - expected vs. + 8.5% - preliminary reading). The uncertainty in the forecast of this aggregate is high (the monthly change is difficult to estimate reliably, subsequent revisions of the data are high).