The worsening epidemiological situation in Slovenia with a spike of new coronavirus infections amid the spread of the Omicron variant had a relatively small impact on the domestic economy, the central bank said on January 25.
The country’s high GDP growth decelerated slightly since Slovenia regained its pre-crisis GDP level. According to statistics office data, Slovenian economy grew by an annual 5% in the third quarter of 2021, following the strong 16.3% growth in the previous quarter.
“Amid heavy government investment, growth is being driven markedly by domestic demand, which is significantly stronger than the euro area average. This is being reflected in a rapid narrowing of the current account surplus”, the Bank of Slovenia said.
The central bank estimated that the country still faces certain macroeconomic risks, as many people are absent from work amid record case numbers, as well as due to the high energy costs and inflation, which is already curtailing real growth in household income.
Employers are facing growing shortages on the domestic labour market and are forced to hire foreign nationals.
The strong economy is also being reflected in the general government position as the general government deficit fell by 1.8 percentage points (pp) year on year in the first nine months of 2021 to 5.2% of GDP.
General government revenues posted a strong growth of almost 11%, thanks to strong economic growth driven largely by booming final consumption, and a sharp rise in employment and wages. The growth in general government expenditures was around 4 pp lower.
"The scale of the anti-coronavirus measures in the second half of 2021 was smaller than in the first half, following the expiry of the largest measures in June. The nominal debt remained well above its pre-crisis level, despite the improvement in the public finance indicators," the central bank said.