Business, May 2012

Foreign investment: Investment in the South Stream gas pipeline a major opportunity for Slovenia's economy

Photo: STA

May, 2012

The companies Plinovodi and Gazprom signed a Supplementary Agreement to the South Stream Slovenia LLC Shareholders Agreement, the final phase before the establishment of a joint project company. At the same time, work on the project, which is being carried out by Plinovodi and Gazprom in compliance with the Agreement between the Government of the Republic of Slovenia and the Government of the Russian Federation on Cooperation in Construction and Operation of the Gas Pipeline on the Territory of the Republic of Slovenia, is rapidly progressing.

The South Stream gas pipeline will enter Slovenia at Lendava, connect to the existing gas network at Kidričevo, and will probably cross the Italian border at Rateče. The pipeline in Slovenia will have a capacity of at least 25 billion cubic meters of natural gas per year, exceeding domestic consumption almost twentyfold. The one-billion euro investment is a great opportunity for the Slovenian economy, and an important step forward in the efforts for higher economic and employment growth.

GDP: Slovenia's economy slips back into recession

In the last quarter of 2011, the gross domestic product (GDP) showed a real term decline of 2.8 % on the same period last year. In comparison to the third quarter, economic activity decreased by 0.7 %, considering seasonal and working day adjustment. The GDP has been decreasing for several consecutive quarters, suggesting that Slovenia's economy is slipping back into recession (defined as a decline in economic activity for two or more consecutive quarters).

In the last quarter of 2011, growth was positively influenced by foreign demand, which is weakening, unfortunately. A comparison of the last quarters of 2001 and 2010 shows a 3 % increase in exports of goods and services, which is considerably less than in the last half of 2010 and the first half of 2011. Domestic consumption has also sharply fallen, and was 4.4 % less than in the same period of the preceding year. This decline is due to smaller household final consumption expenditure (1.8 % less), smaller final consumption expenditure incurred by the state (2.8 % less) and smaller investment expenditure (12.3 % less). In most sectors, the added value also decreased in real terms in the last quarter of 2011. In the manufacturing sector, it decreased by 2.6 % in relation to a year earlier; in the construction industry by 15.5 % less; in trade, transport and catering by 1.5 %; and in technical, scientific and similar sectors by 0.5 %. The overall added value dropped by 2.0 % in comparison with the last quarter of 2010.

OECD: Creating jobs is crucial

The Organisation for Economic Cooperation and Development (OECD) has published its report, 'Economic Policy Reforms: Going for Growth 2012' , in which it assesses progress made on structural reforms in the OECD and BRIICS countries.
One of the conclusions of the report is that the pace of reforms, measured in relation to the previous issue of 'Going for Growth', was greater overall than before the crisis. Priority should be given to policies that can boost jobs in the context of on-going fiscal consolidation.

Slovenia  is one of the countries assessed in the report. The OECD recommends that Slovenia reduce state ownership in network industries (telecommunication, energy) and boost competition by facilitating the entry of new firms in network industries. It further recommends changes to be introduced in the area of labour and retirement legislation.

GZS Awards for Outstanding Economic and Business Achievements

Photo: STA

At its 44th award ceremony, on 6 March 2012 the Slovenian Chamber of Commerce and Industry (GZS) presented awards for outstanding achievements in economy and entrepreneurship. The awards were presented to nine business people who, , come from companies that have succeeded to maintain growth and develop further, and to be innovative and provide new jobs under the current aggravated economic conditions.

The winners of 'economic Oscars' for 2011 are: Janez Bijol from Bijol (assembly, development and sale of mobile cranes); Franc Frelih from Plasta (production of polyethylene films and bags); Boštjan Gorjup from BSH Hišni Aparati (affiliate of the German producer of household appliances Bosch Siemens); Simona Klukej from Bartec Varnost (development and production of explosion-protected electric devices); Marko Kobal from Europlakat (advertising); Marko Lotrič from the Lotrič Laboratory of Metrology; Marjan Mačkošek from the Štore Steel plant; Miroslav Pikovnik from the Unija accountancy bureau, and Gregor Pipan from Xlab (IT development).

GZS promotes the development and innovation-supported orientation of Slovenian companies. In selecting the 2011 award winners, the award committee therefore updated the assessment criteria and placed greater emphasis on development cooperation, particularly in R&D, the protection of intellectual property, exports to demanding markets, cooperation in European programmes, and on integration into Slovenian and European development initiatives.

Text by Marko Šiška, Sinfo, May 2012