November 29, 2019 / 3:50 PM / 12 days ago

UPDATE 1-Slovenia Q3 GDP up by 0.8% q/q as household spending rises

* Q3 GDP up 2.3% y/y

* Household spending up by 4.3% y/y

* Monthly inflation at zero in November (Updates with Bank of Slovenia comments in paras 3 to 5)

By Marja Novak

LJUBLJANA, Nov 29 (Reuters) - Slovenia’s economy expanded by 0.8% in the third quarter from the second, the fastest quarterly growth in a year, as household spending, investments and exports increased, the statistics office said on Friday.

Year-on-year GDP growth slowed to 2.3% in July-September from 2.5% in the April-June quarter. That took gross domestic growth to 2.7% year-on-year in the first nine months of 2019.

The central bank saw a similar trend in the last part of this year.

“Some data from the international environment and surveys among manufacturers indicate there is a possibility of stabilisation of foreign demand while growth of income in some service sector activities should also remain solid,” the Bank of Slovenia said in a statement.

It is expected to soon revise down a June forecast that Slovenia’s economy would expand by 3.2% this year.

The statistics office said in a report that household spending rose by 4.3% year-on-year, boosted by higher employment and wages, while investments were up 4.4%. Exports increased by 4.5% with imports up 6.7%.

Analysts said growth is likely to slow in the last quarter of 2019, in line with Slovenia’s main trading partners and given an expected fall in consumer spending after the Bank of Slovenia this month imposed restrictions on loans.

From November, consumer loans, excluding housing loans, can no longer exceed a maturity of seven years, while a borrower’s debt-servicing costs, including housing loans, cannot exceed 67% of their income, according to a Bank of Slovenia decree.

“In the last quarter, consumer spending is likely to slow due to loan restrictions while the global economic slowdown is also likely to continue,” said Primoz Cencelj, senior portfolio manager at investment firm Generali Investments Slovenia.

He said full-year growth is likely to be below 2.8%, as forecast by the government’s economic institute UMAR in September. Slovenia’s economy expanded by 4.1% in 2018.

In September, Slovenia’s jobless rate was the lowest in almost 11 years at 7.2%, but the number of those out of work has risen since.

The statistics office also said consumer prices were unchanged in November, with year-on-year inflation falling to 1.4% versus 1.5% in the previous month. (Reporting By Marja Novak; Editing by Catherine Evans and Timothy Heritage)

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