Slovenia's economy expanded by 2.5 percent year-on-year in the first quarter, boosted by a growth of exports which were up by 5.3 percent, the statistics office said on Tuesday. Analysts said figures indicate that economic growth this year will probably be higher than 1.7 percent forecast by the government in March.
"Export figures are better than expected and as indicators for Germany (Slovenia's largest trading partner) are also improving, I expect similar export growth in the coming quarters," Marko Rozman, head of investment at the treasury of Dezelna Banka, told Reuters.
"Therefore I see GDP growth this year at about 2 percent," he added. Slovenia exports about 70 percent of its production, mainly to other European Union states. Exports include cars, cars parts, pharmaceutical products and household appliances. Export growth compares to a rise of 3.3 percent in the last quarter of 2015. State spending was up by 2.7 percent while household spending increased by 0.6 percent versus growth of 2.6 percent in the previous quarter.
"The competitiveness of the economy remains high ... but slower growth of private consumption is worrisome as it is expected that private consumption will support economic growth in the next two years due to higher employment, wages and consumer trust," said Luka Flere, head of the investment sector at investment firm KD Skladi. Slovenia, which narrowly avoided an international bailout for its banks in 2013, managed to return to growth in 2014 and its economy expanded by a further 2.9 percent in 2015.
The government forecast lower growth this year mainly on account of expected lower growth of exports and an expected fall of investment due to lower inflow from the European funds. Investment fell by 1.5 percent in the first quarter versus an increase of 8.1 percent in the previous one. "Investment in buildings was down by 27.2 percent, but the fall was mitigated by investment in machinery and equipment which increased by 9.3 percent," the statistics office said, noting the most prominent increase in investment in metal construction and transport equipment. The statistics office also said the country was still struggling with deflation, similar to other euro zone states, which reached 0.5 percent year-on-year in May versus a deflation of 0.7 percent in April.