Slovenia's economy expanded an annual 5.5% in the Q4, the second-fastest pace in the 13-nation euro region, as exports surged and higher wages and investment boosted domestic demand.
Growth in the former Yugoslav republic's $34.6 billion economy compares with 5.6% in the Q1, the Statistical Office of Slovenia in Ljubljana reported on its Web site today. Growth for the full year was 5.2%. The European Union's eastern members, including Slovenia, are benefiting from a surge in investment and trade since membership in the EU ballooned the bloc to 27 nations. The Q4 expansion in Slovenia, which adopted the euro on January 1, is the fourth consecutive three-month period above 4.7%. Combined euro-zone growth was 0.9% in the Q4.
„Robust domestic demand remained the most important growth component, mainly thanks to a significant revival in investment activity,” said Sándor Gardo, an economist at Vienna-based Austria Creditanstalt bank in an e-mailed statement today. „This year will also be a promising year for Slovenia.” Slovenia was the only of the nations that joined the EU in 2004 to qualify for making the switchover to the common currency as it kept debts, spending and inflation under control, even though growth is slower only than Ireland's 7.7% Q3 expansion within the euro region.
The inflation rate stood at 2.1% at the end of February, within the limits for countries using the euro. That eased concern that the adoption would spark price increases. Lithuania and Estonia, who also applied to join the euro zone on January 1, failed to qualify because of accelerating inflation. Exports underpinned the country's growth, rising 9.5% in the quarter, while imports rose 10.7%. Domestic consumption grew 6.6% in the Q4, the office reported. The Finance Ministry said exports are „dispersed among various companies and that is what makes Slovenian economy so resilient.”
The five biggest exporters are home appliance maker Gorenje d.d. from Velenje, carmaker Renault SA's Slovenian unit Revoz, drugmakers Lek-Novartis and Krka d.d. and auto parts maker Prevent Group, according to the Finance Ministry. „These companies represent only a fifth of the whole Slovenian export, so it's a lot of small companies that contribute to exports,” Slovenian Finance Minister Andrej Bajuk said in an interview February 20. Consumption was boosted by a 15.2% increase in fixed capital formation in the Q4, compared with 14.6 in the Q3. The government's contribution to GDP rose 4.2% during the quarter, up from 3% rise in the previous three months, the data showed. (Bloomberg)