After a consistent period of stagnation or contraction since the year 2009, the Slovenian economy is once again showing signs of improvement. In September, the number of exports in Slovenia saw a significant surge, approximately 14%. This is the most startling growth rate in three years. As a result, economists suggest that this could be a sign that the euro-zone member is finally on the rise after narrowly avoiding an international bailout last year.
Last year, the Slovenian government injected over 3 billion euros into local banks to avoid an international bailout and prevent the country from collapsing beneath bad loans. Statistics suggest that the remaining bad loans in local banks amount to approximately 6 billion euros, which is around 14.8% of all loans in Slovenia.
The year over year rise of 14.2% in shipments during September includes exports that rose 6.1% during the first nine months of 2014, according to the statistics office. In the same nine-month period, imports also grew approximately 2.1%. The export figures could lead to a surprisingly high GDP growth rate this year, according to Primoz Cenceli, a fixed income manager from the investment firm KD Skladi.
The Growth in Slovenia's Economy
Statistics have shown that exports are significantly ahead of the macroeconomic institute of Slovenia's 2014 forecast for 3.7%. Exports predominantly include:
* Car parts
* Household appliances
* Pharmaceutical products
At the same time, investments appear to be rising while the unemployment rate is gradually beginning to fall. However, there have been comments that economic growth in the country could slowdown in 2015 if the government of Prime Minister Miro Cerar enforces public sector savings. Currently, the center-left government is planning to cut the wage of public sector individuals by around 3% during 2015, in an attempt to drop the budget deficit below 3% of GDP as demanded by the European Union. The shortfall for this year expects to be around 4.3% of GDP.
This is outstanding for a center-left government. This is what America needs to do with its federal employees along with cutting every department by about 20%. You have to cut out the fat when there is too much of it.
Fighting for Survival
Despite some concerns, the European Commission is convinced that Slovenia's economy could grow by 2.4% this year, above the official forecast of 2%. The forecast for next year is 1.7%, which is slightly higher than the government projection. Analysts have said that exports to countries in the European Union, which account for 77% of Slovenia's exports, should continue to rise. However, exports outside of the EU, to areas such as the Ukraine and Russia, may fall, as exports to these two countries have already seen an approximate 8% decrease this year.