Slovenia secong quarter GDP shrinks 13% as spending, exports fall

LJUBLJANA (Reuters) - Slovenia’s economy shrank by 13% year-on-year in the second quarter of 2020, the statistics office said on Monday, as the COVID-19 pandemic reduced household spending and exports.

The Bank of Slovenia said later on Monday that the fall was in line with expectations and that initial data for the third quarter “indicates a fast rebound of economic growth over the rest of the year” although risks remain high.

Household spending fell by 16.6% year-on-year compared to a fall of 5.8% in the previous quarter, while exports were 24.5% lower. Investments declined by 12.8% versus the same quarter last year. GDP in the first half of 2020 was down by 7.9% year-on-year, the office said.

“Most components of GDP decreased in the second quarter, while the fall in domestic spending had the biggest impact on the GDP decline,” the statistics office said in its report.

Slovenia introduced a general lockdown against the coronavirus in the middle of March and started to lift it gradually in the second half of April.

In May it became the first European country to declare an end to its COVID-19 epidemic. So far, it has reported 2,883 cases of the novel coronavirus and 133 deaths from COVID-19, the respiratory disease caused by the virus.

Analysts said they were confident the second quarter was the lowest point and economic performance will improve in the coming quarters.

“We have been registering a strengthening of the economy from May, mainly of the service part of the economy. However, year-on-year, economic growth will only be reached in the first quarter of 2021,” Bojan Ivanc, chief economist of the Chamber of Commerce and Industry, told Reuters.

The government expects the economy to shrink by 7.6% over the whole of 2020 and expand by 4.5% in 2021. The Bank of Slovenia on Monday confimed its June forecast according to which GDP will fall by 6.5% this year.

Slovenia’s export-oriented economy expanded by 2.4% in 2019. Its main exports included cars, car parts, pharmaceutical products and household appliances.

Reporting By Marja Novak; editing by Barbara Lewis