Slovenia: GDP records slowest increase in one-and-a-half years in Q2
GDP reading: GDP growth waned to 0.7% year on year in the second quarter from 2.1% in the first quarter, marking the worst result since Q4 2022.
On a seasonally adjusted quarter-on-quarter basis, GDP rebounded, increasing 0.2% in Q2 and contrasting the previous quarter’s 0.1% decrease.
Drivers: Domestically, households continued to feel the pinch of elevated interest rates and falling nominal wage growth: Private consumption growth softened to 1.1% year on year in Q2 (Q1: +1.9% yoy) and fixed investment contracted 1.6% (Q1: +1.4% yoy), marking the worst reading since Q3 2020; capital outlays in the construction sector fell especially sharply. More positively, public spending growth rose 12.3% in the quarter, outpacing the previous quarter’s 7.0% expansion and marking the fastest reading in over a decade.
On the external front, exports of goods and services fell 0.8% on an annual basis in the second quarter, matching the first quarter’s result. Conversely, imports of goods and services growth sped up to 4.4% in Q2 (Q1: +0.5% yoy). Consequently, the external sector subtracted 4.1 percentage points from GDP—deteriorating from Q1’s minus 1.1 percentage points.
GDP outlook: Our panelists forecast economic growth to gain steam in H2, supported by monetary policy easing, a low unemployment rate and receding inflation. Moreover, post-flood reconstruction efforts will continue to fuel public spending. An expected increase in global vehicle demand should add a further impetus, driving a rebound in exports of goods and services.