Press release - Summary of macroeconomic developments and bank performance in 2015
Governing Board of the Bank of Slovenia discusses and approves reports Summary of macroeconomic developments, February 2016 and Monthly information on bank performance, February 2016*.
1. Summary of macroeconomic developments, February 2016
The structure of global economic growth shifted towards the advanced western economies in 2015, as the contribution made by the BRIC countries declined. Global economic growth was sustained more than before by the advanced economies, primarily the US. The moderate recovery continued in the euro area, primarily as a result of increased private consumption on the basis of an improvement in the situation on the labour market, and also on the basis of the impact of falling oil prices on disposable income. Global growth nevertheless slowed in 2015, while the outlook for 2016 also deteriorated. In the European Commission’s February forecasts there were no significant changes to the growth forecasts for euro area GDP and exports, but the risk from the international environment is judged to have increased significantly.
In Slovenia almost all categories of services continued to record growth in activity at the end of the year, while the signals from other sectors were mixed. Industrial production increased by 4.5% over the year, but by the final quarter was already declining compared with the previous quarter. The quarterly contraction in construction came to an end towards the end of the year, primarily as a result of an increase in residential construction. Last year’s slight strengthening in household consumption was mostly based on car purchases and expenditure on tourism, while turnover in the retail sector (excluding cars) recorded barely positive growth. The economic sentiment deteriorated slightly in January and February.
The current account surplus narrowed in December as a result of a delay in the seasonal inflow of funds from the EU budget at the end of the previous financial framework. Growth in the merchandise trade surplus slowed in the main aggregates in the second half of the year as a result of the slowdown in export growth and December’s leap in imports, while the surplus of trade in services continued to record sharp growth, towards the end of the year primarily as a result of growth in exports of transport services and a decline in imports of construction services. The current account surplus widened from 7.0% to 7.3% of GDP in 2015, while the trade surplus widened from 7.9% to 9.5% of GDP.
The favourable developments on the labour market have continued. The number of registered unemployed was down further in year-on-year terms in January, and growth in employment remained relatively strong until December. The number of vacancies in the final quarter of last year was up almost 7% on the third quarter. Wage developments were subject to a year-on-year increase in bonus payments in connection with private-sector earnings in November, and the agreed promotions in the public sector in December.
In contrast to the rise in year-on-year inflation to 0.4% in the euro area, the rate in Slovenia fell again in January to -0.8%. Global prices of food and other commodities are continuing to fall, while domestic consumption remains restrained. After another wave of falling oil prices at the end of the year, this year’s inflation projections for Slovenia will again be lowered slightly.
According to the European Commission’s estimates from February of this year, the general government deficit according to ESA 2010 methodology narrowed to 2.9% of GDP in 2015, while the general government debt stood at 83.5% of GDP at the end of the year. The narrowing of the deficit was attributable to the more favourable economic situation and the corresponding higher growth in revenues, to consolidation measures and to the absence of bank recapitalisations. The deficit is expected to narrow further this year. The government sector’s financing conditions on the financial markets remain favourable, and February saw the first issue of treasury bills with a negative interest rate.
2. Monthly information on bank performance*
The Slovenian banking system’s total assets declined by 3.4% or EUR 1.3 billion in 2015. The stock of funding on the wholesale markets declined by an additional EUR 1.5 billion, which reduced the proportion of bank funding that it accounts for to 12.4%. Deposits by the non-banking sector declined in December as a result of a decline in government deposits, but nevertheless increased by 2.9% in 2015. The increase was attributable to growth in deposits by non-financial corporations and households. While growth in deposits by non-financial corporations was rather volatile over the year, growth in household deposits was relatively stable, and reached 3.1% in December. The Bank of Slovenia remains alert to the fact that in an environment of low interest rates the maturity structure of deposits by the non-banking sector shortened in 2015, and sight deposits now account for over a half of the total.
The contraction in loans to non-financial corporations slowed over the year, reaching 10% in December. The large domestic banks recorded the smallest contraction in corporate loans last year, at 8.1%. Growth in household loans has been positive since May of last year, the year-on-year rate reaching 1.2% in December, as housing loans increased while the contraction in consumer loans slowed. The first BAMC bonds matured in December, which slightly reduced the banks’ stock of investments in securities. The proportion of total assets that they account for nevertheless increased to 26.3% at the end of 2015, up 1.5 percentage points on the end of 2014.
The banks ended 2015 with a pre-tax profit of EUR 195 million. The banks created significantly less impairments and provisions in December than at the end of previous years, which had a beneficial impact on final earnings in 2015.
*only in slov. language; Mesečna informacija o poslovanju bank