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Slovenia Business Week no. 22: Economic Growth at 7.2% in Q1

Fuelled by flourishing exports, domestic spending and investment, Slovenia's economy expanded at an annual rate of 7.2% in the first quarter of this year

Fuelled by flourishing exports, domestic spending and investment, Slovenia's economy expanded at an annual rate of 7.2% in the first quarter of this year, the Statistics Office said on Friday, 8 June.

This is the fastest rate of economic growth in Slovenia since the second quarter of 1999, when a spending rush ahead of the introduction of value added tax provided a one-time boost to growth, Karmen Hren of the Statistics Office told the press on Friday, 8 June. It is also the fifth consecutive quarter that the economy has expanded at near or above 5%.

Slovenia's exports were the main motor of growth in the first quarter, expanding by 13.6% compared to the same period a year ago, said Hren, who added that imports also grew robustly (13.7%).

Hren told the press conference that the economic growth figures did not come as a surprise, since all indicators had been pointing to the fact that the economy was in good shape.

This was echoed by Economy Minister Andrej Vizjak, who said his ministry was pleased with the growth rate. "It seems the measures taken by the government and other players are the right ones and that they have bolstered the positive mood in the economy," Vizjak told STA.

He added that the ministry had been looking forward to strong growth given the trends in exports and investments. "But I must admit that we are pleasantly surprised by the final figure," said Vizjak, who termed the growth rate "a big achievement".

In the first reaction, Slovenia's economists hailed the rate of growth and predicted a bright future.

Saso Polanec of the Ljubljana Economics Faculty told STA the current robust growth was a result of Slovenia's integration into the common EU market, the strong consumption demand in Germany and the fast growth of Slovenia's construction sector.

If this rate of growth continues, Slovenia will catch up with Italy in terms of GDP per capita within three to four years, said Polanec.

Polanec added that the strong demand in Germany, Slovenia's main export market, was a result of the recent reform of Germany's labour legislation, which had improved productivity in Europe's biggest economy.

Meanwhile, France Krizanic also pointed to the importance of a warm winter in boosting Slovenia's economic growth rate. The member of the Ljubljana Law Faculty's Economic Institute added that strong growth was expected to continue in the coming months, although at a somewhat less intense rate, since the first quarter was extraordinary.

Hren told the press conference that gross fixed capital formations expanded by 21.6%, contributing significantly to the overall growth.

The high investment spending was fuelled by a flourishing construction sector, which with the help of a warm winter expanded by nearly 30% compared to last year. According to Hren, motorway construction led the way.

Strong growth was also witnessed in the manufacturing sector, which expanded by 10.9%, one of the best results in 15 years, said Hren.

Meanwhile, growth of domestic consumption remained flat at 3%, with household consumption up 3.4%.

Hren said the favourable economic situation was reflected in the highest rate of employment in Slovenia ever, with the number of persons in employment rising 2.4% to 936,000. The biggest growth was registered in construction, where the number of employed grew by nearly 10%.

Source: Slovenian Press Agency STA

Author: STA, Slovenian National Press Agency