Economic growth and inflation as expected this year

IMAD's monthly "Slovenian Economic Mirror", presenting the main economic indicators. Photo - source: IMAD

December 2010

The growth in gross investments and household and central government spending are important reserves for the future growth of the Slovenian economy.

Slovenia saw economic growth in the third quarter this year as well, chiefly as a result of an increase in exports. The national statistical office estimates that economic growth in 2010 will be around 1%, as forecast by the Institute for Macroeconomic Analysis and Development (UMAR), while European Commission forecasts for Slovenia were 1.1%. According to these estimates, GDP should increase next year by 1.9% and by 2.6% in 2012. The last month of the year is also indicating that inflation in Slovenia this year will be, as planned, 1.8%. This is undoubtedly encouraging news, although gross investments in the third quarter again fell, household spending has still not picked up and government spending is stagnating. Here it is possible to see important reserves for future growth.

Slovenia is winning the battle against the crisis

According to the Ministry of Finance Slovenia is winning the battle against the crisis. Industry is picking up, although problems in the construction sector mean that GDP should continue to be sluggish.  The government is drawing up special measures to help that part of the construction industry that is still buoyant and keeping its head above water.

Construction companies were among the worst at settling their liabilities even during times of growth; in the current climate, with the Slovenian economy emerging piecemeal from the crisis, this has worsened still further. But it is not only the construction industry that fails to pay on time. According to figures from AJPES (Agency of the Republic of Slovenia for Public Legal Records and Related Services), the number of companies delaying payment reached a record high in October of 5,565; the average daily amount of due and unpaid liabilities of EUR 333 million was also a record. According to figures from AJPES, this led in the first ten months of this year to 360 companies and cooperatives entering bankruptcy proceedings. In the same period, 186 companies were removed from the companies register.

The strongest delegation yet to Russia

President Dr Danilo Tűrk attends the Russian-Slovenian business conference. Photo: Stanko Gruden/STA, source: www.up-rs.si/up-rs/uprs-eng.nsf

Over 100 Slovenian business figures and five ministers made up a delegation which, headed by Slovenian President Danilo Türk, visited Russia. This was the strongest delegation yet to Russia. President Türk and Russian president Dimitri Medvedev signed a partner agreement on modernisation, with a number of other economic agreements and memorandums also being signed. Slovenian-Russian business conferences were also convened in Moscow, St Petersburg and Samara.

According to figures from the Bank of Slovenia, foreign direct investment in the Slovenian economy fell by 6.6% last year to EUR 10.5 billion. Slovenian investments abroad also fell.

Protest against the company Lafarge

Holding Slovenske elektrarne. Photo: STA

The residents of Trbovlje warned the government of precisely how a lack of concern for the environment can affect human health as they protested against the company Lafarge, which is engaged in waste incineration in Trbovlje, for which it obtained government approval. The residents of Trbovlje are convinced that the gases released into the atmosphere are leading to an increase in cancers.

This is not the only protest to have shaken Slovenia in recent weeks. The government’s aim of merging the two state electricity companies, Holding Slovenske Elektrarne and Gen, has sparked discontent.

Employees at Gen are fighting primarily for their jobs. There are complications too in relation to the sixth block of Šoštanj Thermoelectric Plant, since employees fear that, with the replacement of the plant’s director, Slovenia will cancel construction at the new block, which is dependent on European money, for which a contract with the European Investment Bank has already been signed. This is not the only major energy project on which Slovenia is counting in the long term, since a new block at Krško Nuclear Plant is also meant to be built. Here the question surrounding the division of waste between the two owners of the old section of the plant is still unresolved, with Croatia, which owns half the plant, still unwilling, after 20 years of operation, to take half the waste produced by the plant.

Text by Vesna Bertoncelj Popit, Delo full text Sinfo, January 2011