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					                                                                   Slovenian Economic Mirror, July-August 2009       3
                                                                                                 In the Spotlight



In the spotlight
After two quarters of negative growth, Slovenia’s GDP increased by 0.7% (seasonally adjusted) in the
second quarter of 2009 relative to the first, while the y-o-y drop in activity remained high (-9.3%) due to
the negative effects of the economic and financial crisis. The international economic and financial crisis had a
particularly great negative impact on exports, which dropped by 21.3% compared with the same period last year,
but given an even greater decline in imports (-24.8%), the contribution of net exports to GDP growth was again
positive (3.1 p.p.). Another key factor in the GDP decline is lower fixed capital formation (-27.3%), as a result of lower
capacity utilisation following the decline in orders and in part also of tighter financing conditions and a slowing
cycle in infrastructure investment. Similar to the first quarter, inventories made a significant negative contribution
to GDP growth (-3.7 p.p.). Household consumption declined for the first time y-o-y (-2.6%), and among consumption
aggregates only government consumption, as expected, recorded an increase. On the production side the greatest
contribution to the y-o-y decline in value added again came from manufacturing, while a strong decline was also
observed in construction and market services which are more closely linked to manufacturing and construction or
household consumption and tourism.

Labour market indicators deteriorated further in the second quarter of the year, given that the number of
persons in employment continues to drop and that the number of registered unemployed in August was
almost a half higher than last year. The number of employed persons
				
DOCUMENT INFO
Description: After two quarters of negative growth, Slovenia's GDP increased by 0.7% (seasonally adjusted) in the second quarter of 2009 relative to the first, while the y-o-y drop in activity remained high (-9.3%) due to the negative effects of the economic and financial crisis. Labor market indicators deteriorated further in the second quarter of the year, given that the number of persons in employment continues to drop and that the number of registered unemployed in August was almost a half higher than last year. Consumer prices remained unchanged in August, while their y-o-y growth increased after deflation in July, but the price level remained at the same level as in the previous August. The net lending activity of domestic banks strengthened somewhat in July, totaling EUR217.1 million, close to a third of this year's total net flows of loans, but remains far more modest than in previous years.
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