On the 24th of May, the Prime Minister addressed the MPs. They were confirming the amendments to the state budget, which was based on the Prime Minister’s optimism that Europe and Slovenia would remain in good economic shape. He first expressed this optimism last October when the budget was adopted and again at the end of May this year when the budget amendment was adopted. A little more than two weeks after the optimistic forecasts, here are the official figures: the euro area has slipped into a technical recession.
“Today, we have before us a budget amendment that not only confirms the optimism I dared to publicly forecast last October, but is, in fact, even better,” said Prime Minister Robert Golob at the end of May, adding that there is no recession in Slovenia and in Europe, that the energy crisis has been successfully contained, and that the budget deficit should be reduced with the proposed amendment.
We have already written extensively about the government’s management of Slovenia’s economic crisis. During the heating season, extremely high prices drove people onto the streets. Many people with low incomes had to choose between food and heating. Some called in to our show “Kdo vam laže” (Who Is Lying To You) to tell us about it. The Prime Minister recently admitted that food prices are too high. He will introduce a measure to monitor the entire food chain and thus put pressure on all of the players in the system. Many are convinced that the measure will not work, just as the website that monitored the prices of basic foodstuffs did not work.
A further deepening of the recession in Europe would almost certainly put further strain on an already over-optimistic budget. Reduced demand for Slovenian products and services abroad would result in reduced budget revenues and a reduced capacity of the government to introduce emergency measures to alleviate the rising prices, should the recession deepen further.
It is worth noting that the budget has been the subject of severe criticism by the Fiscal Council in recent months. Last November, they wrote that it was unrealistic, and in May this year, that the budget was flawed.
Germany in recession, Poland with robust growth
Eurostat still reported a 0.1 percent growth in the euro economy in the first quarter in May. Then Germany reported that it had entered a technical recession. In the first three months, the economy contracted by 0.3 percent on a quarterly basis. High inflation and high interest rates, which together depress demand, have been the main contributors to the contraction. The most severe contractions in economic activity were recorded in Ireland, Lithuania and the Netherlands.
However, not all countries are facing a cooling economy. Poland recorded robust growth of 3.8 percent compared to the previous quarter, followed by Luxembourg (+2 percent) and Portugal (+1.6 percent).
Is Slovenia prepared for a recession in Germany?
After the German Federal Statistical Office Destatis published the news of the country’s slide into recession, Slovenian Democratic Party (Slovenska demokratska stranka – SDS) MP Andrej Kosi addressed a parliamentary question to the government – about Slovenia’s preparedness for a recession in Germany. This is because Germany is our most important foreign trade partner. He addressed the following questions to the government:
– Is the Government of the Republic of Slovenia aware of the seriousness of the situation related to the recession in Germany?
– Is Slovenia prepared for the consequences of the recession in Germany?
– What measures will the Government of the Republic of Slovenia take to mitigate the impact of the recession in Germany on the Slovenian economy?
– What measures will the Government of the Republic of Slovenia prepare to improve the competitiveness of the Slovenian economy?
– Will the Government of the Republic of Slovenia prepare a bill to relieve wage taxes?
Gal Kovač
