Strong exports and a recovering labour market propelled Slovenia's economy to growth of 2.7 percent in the second quarter, increasing chances that fallout from political events abroad will be kept in check. Year-on-year growth rose from 2.3 percent in the previous three months, the Statistics Office said on Wednesday, as the jobless rate fell to a five-year low of 7.8 percent and sales of Slovenian goods abroad surged by 7.5 percent.
But the legacy of a 2013 banking crisis that the country is still struggling to overcome kept a lid on investments, which rose just 0.6 percent after shrinking by 0.7 percent between January and March. "Growth figures are favourable but we should not be too optimistic as we are facing possible risks due to Brexit and the general geopolitical situation, particularly the EU's relations with Turkey and Russia," Primoz Cencelj, fixed income portfolio manager at investment firm KD Skladi, said. "In spite of that Slovenia's GDP growth this year is likely to exceed 2 percent." That would be significantly above the mark of 1.7 percent estimated in March by the government's macroeconomic institute, a figure it is due to revise next month.
Slovenia sells about 70 percent of the goods it produces abroad, notably cars, car parts, pharmaceuticals and household appliances bought mostly by other European Union states. Export growth accelerated from 5.9 percent in the first quarter, the statistics office said, while household spending was up 2.6 percent from an earlier rise of 1.2 percent amid subdued inflation.