Slovenias economy could shrink 6 percent or more this year if the global economic crisis continues at the current level, Bostjan Vasle, the head of a government economic institute, said on Friday. This marked the gloomiest economic forecast so far for Slovenia. Earlier, the statistics office reported that industrial output fell 22.3 percent year-on-year in February and on Thursday it said exports slumped 25.1 percent in the month.
"If the shock that took place in the past six months would be repeated in the next six months, economic growth could be around minus 6 percent or even worse," Vasle, who heads the Institute of Macroeconomic Analysis and Development, told an economic conference. Last month the institute forecast Slovenias gross domestic product at -4 percent this year, but said it expected the economy to expand 1 percent in 2010.
Vasle said on Friday that the latest indicators showed economic output could be much worse than forecast, and the crisis would be longer than had been expected at the start of this year, when analysts saw it ending in 6 months or one year. Vasle said exports were expected to fall 9 percent this year and the number of jobless could rise above 100,000. In January, there were 73,911 unemployed, with the jobless rate reaching 7.8 percent.
Vasle said private consumption would decrease this year while government spending will increase, as the government needs to counter the effects of the crisis. Consequently, this years budget deficit was likely to reach 5 percent of GDP, compared with 3.4 percent forecast earlier, he said. Inflation is seen at around 1.5 percent year-on-year.
Slovenia, which adopted the euro in 2007, was the fastest growing euro zone member over the past two years, expanding by a record 6.8 percent in 2007 and 3.5 percent in 2008.
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