The Slovenian economy continued to expand in the third quarter. The year-on-year GDP growth was driven in particular by renewed impetus in investment and construction, but was still being held back by international trade.
GDP in the third quarter was up 0.8% on the previous quarter, and up 1.7% in year-on-year terms. Economic growth in Slovenia thus outpaced that in the euro area overall, which recorded quarterly and year-on-year rates of 0.2% and 1.4% respectively.
Domestic final consumption was driven by private consumption and government consumption alike in the year-on-year comparisons. Household consumption increased by 1.0% amid relatively high real wage growth and low unemployment. Government consumption was also up in year-on-year terms, driven by employment growth and rising health expenditure. Gross fixed capital formation was up sharply in year-on-year terms (by 9.1%), mostly on account of the increased impetus brought to public infrastructure projects, and was a factor in the sharp strengthening of construction activity. By contrast, activity in the export sector remained down in year-on-year terms, on account of the uncertainty in the global environment, which is continuing to curtail demand in the main trading partners. Net trade acted to reduce economic growth by 1.4 percentage points, as the solid growth in domestic demand raised imports by 0.7%, partly as a result of the build-up of inventories, which accounted for 0.6 percentage points of the GDP growth. The breakdown by sector reveals a sharp uptick in year-on-year growth in value-added in construction, and continuing growth in the service sector, while value-added in industry again contracted slightly, driven by falling output in the energy sector.
Although the economic situation improved in the second and third quarters, the available data for this year suggests that GDP growth will be weaker than in the two previous years. Today’s data will be taken into account when Banka Slovenije draws up its new projections, which will be released in the second half of December.