Slovenia’s exports shrank 15.3% year-on-year in December, data showed on Monday, and analysts said the euro zone member’s economy could contract for the first time in years.
The downturn was highlighted by Slovenia’s second largest exporter, household appliances maker Gorenje, which said on Monday that its orders have shrunk 20 to 25% year-on-year in the first two months of the year. “It is possible that Slovenia will have negative economic growth this year, but in any case growth will be close to zero,” said Janez Sustersic of the Faculty of Management at the University of Primorska.
The statistics office on Monday reported December exports were down to €1.2 billion while imports fell 13.3% to 1.5 billion. Exports in the whole of 2008 rose 1.9% while imports increased 6.7%. The office also said January inflation fell to 1.4% year-on-year from 1.8% in December, to reach the lowest level since the country’s independence in 1991.
“Low inflation is mainly a result of low economic growth. Slovenia now does not need to worry about inflation but about growth,” Sustersic said. However, analysts said Slovenia, which joined the European Union in 2004 and adopted the euro in 2007, was still benefiting from the protection of euro zone membership.
“Certainly the euro is now coming in very, very handy,” said Christian Jenni of credit rating agency D&B. Of the former communist countries that joined the EU in 2004 and 2007, only Slovenia and Slovakia have so far been allowed to adopt the euro. Jenni said Slovenia’s economy should be able to pick up quickly when global conditions improve because it had not had very high credit growth and double-digit inflation in the past.
However, unemployment is expected to rise significantly this year. The national Employment Service said on Monday the number of people unemployed had jumped by 11.6% between December and January. This brought the jobless total to 73,911 and the Service said that could rise to between 80,000 and 100,000 people this year -- higher than a December estimate of 80,000 at most this year.
Many companies have announced job cuts in the past few months. Gorenje has offered all employees a possibility of voluntary redundancy, after cutting working hours in January to 36 per week from 40 earlier. (Reuters)