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Economically Speaking, Slovenia Is in Excellent Shape: We Are Being Paid to Borrow and Unemployment Is 23 Percent Lower Than It Was a Year Ago

Slovenia is recording excellent results in the areas of unemployment, economic growth, income growth, as well as trade and investment promotion. However, these results cannot be taken for granted because if the state had not borrowed, it would not have been able to properly stimulate the economy and thus maintain employment. Despite the fact that some people like to claim otherwise, the country is achieving growth, and with this trend continuing, we will be able to successfully rehabilitate the public debt, which has increased due to the epidemic. This is also being confirmed by foreign media outlets, which ranked us second among the randomly selected OECD countries that did the best in managing the economic crisis, which is a result of the coronavirus pandemic.

Favourable trends in the area of employment and unemployment, which marked 2021, continued at the end of the year as well, as there was no significant increase in unemployment in December, which was, however, typical for December in the previous years. The number of registered unemployed persons increased by 0.9 percent compared to November, to 65,969. Compared to December 2020, unemployment was lower by 24.4 percent, and even lower than in the pre-covid crisis period.

In December, 5,956 unemployed persons got newly registered at the Employment Service of Slovenia, which is 23 percent less than in December 2020, and 2,916 of the formerly unemployed got a job, which is 0.1 percent more than a year ago. In 2021, 62,707 unemployed persons re-registered at the Employment Service, which is 36.2 percent less than in 2020, and 84,021 deregistered, of which 60,351 got employed, which is 6.3 percent less than in 2020. On average, 74,316 people were unemployed per month in 2021, which is 12.6 percent less than the average of the year 2020. In 2021, employers reported 156,163 vacancies to the Employment Service, which is 36.2 percent more than in 2020.

Slovenia also achieved record economic growth this year, as in the first nine months of 2021, gross domestic product (GDP) was 7.4 percent higher than in the same period in 2020. The year of record growth was also achieved in the field of investments. In the third quarter of 2021, investments increased by 9.6 percent. The gross value added of the total economy in the third quarter of 2021 was 8.4 percent higher than in the same period in 2020 when it was negative due to the coronavirus crisis (-1.2 percent). Government measures to reduce the effects of the pandemic and support the economy also importantly contributed to this.

Compared to last November, exports were 24.1 percent higher this year, and the imports were 25.6 percent higher than in November 2020. The values of imports and exports were also higher than the average value in 2019, namely exports by 32.5 percent and imports by 46.6 percent. From January to November 2021, Slovenia also exported and imported more goods than in the same period in 2020. It exported 19.3 percent more in value and imported 30 percent more.

The gross disposable income of households in the third quarter of 2021 was 6.7 percent (or 497 million euros) higher than in the third quarter of 2020. Steady growth in gross disposable income and the release of restrictive measures were reflected in rapid growth in final household consumption for the second quarter in a row. Compared to the third quarter of 2020, it was 13.9 percent or 906 million euros higher (in the second quarter of 2021: 21,3 percent or 1,163 million euros).

Revenues in the state budget have been the highest since the beginning of recording them
Due to the favourable economic situation, higher disposable income and lower unemployment, the state budget recorded 1.1 billion euros in revenues in December 2021, which is the highest since the beginning of recording the general government revenues. Expenditures reached 1.67 billion euros, leaving the state budget with a deficit of 572 million euros. According to the preliminary realisation, the revenues of the state budget in 2021 reached 11.17 billion euros, which is 450 million euros more than projected in the adopted budget for this year. Regarding expenditures, the preliminary realisation shows that in 2021 we realised 14.26 billion euros, which is 720 million euros less than allowed by the decree.

Nevertheless, the coronavirus epidemic took its toll, and the state had to intervene. In order to stimulate the economy, we borrowed slightly more due to the epidemic, and thus the consolidated gross government debt amounted to 40,134 million euros or 79.6 percent of gross domestic product at the end of the third quarter of 2021 – which is lower than the EU average. According to the Ministry of Finance, it was even lower than that at the end of the year, at 77.5 percent of GDP, which is one percentage point less than previous estimates predicted.

The Ministry of Finance has also announced that it will stimulate the economy to make additional investments, which will thus have a positive impact on budget revenues, which will also affect the rehabilitation of public debt. “The envisaged solutions are of greater and long-term importance for the competitiveness and growth, as well as the development of the Slovenian economy,” they pointed out.

Slovenia enjoys the reputation of a solid and trustworthy country among the investors
The credit ratings of the Republic of Slovenia have remained stable in the last two years. Since the beginning of the Covid-19 pandemic in March 2020, the credit rating agencies Standard & Poor’s Global, Fitch Ratings and DBRS have repeatedly confirmed the credit rating of the Republic of Slovenia and Moody’s Investor Service even upgraded it in October 2020. At the same time, the agencies state that the negative consequences of the pandemic for Slovenia are manageable, as Slovenia entered the pandemic crisis with strengthened public finances and a well-functioning economy. “Slovenia enjoys the reputation of a solid and trustworthy country among the investors, and high credit ratings also provide us with uninterrupted access to financing on international capital markets, at favourable interest rates,” the Ministry of Finance explained.

On the 5th of January 2022, Slovenia successfully issued a 4-year bond in the amount of 1.25 billion euros, maturing on the 13th of February 2026, and a 40-year bond in the amount of 500 million euros, maturing on the 13th of February 2026. The yield on the 4-year bond is once again negative – 0.241 percent, which means that the budget will receive 1.23 million euros, or as the economist, Dr Matej Lahovnik said: “The investors will pay Slovenia 12.3 million euros so that they can lend us 1.25 billion euros for four years.”

Slovenia is among the better countries in terms of facing the economic crisis which resulted from the Covid pandemic
According to the latest data from the world media The Economist, Slovenia was second among the 23 randomly selected OECD countries in terms of dealing with the economic crisis resulting from the global pandemic. The only country that did better than us is Denmark, which undoubtedly confirms the success of our government’s measures in tackling the consequences of the pandemic. “The effectiveness of the government’s anti-crisis measures is demonstrated by the excellent 2nd place in the ranking of 23 OECD countries, as well as by the fact that the countries with which we do most of our business, which are Germany, Austria and Italy, are much lower on the same scale,” Lahovnik commented on The Economist’s latest report that included Slovenia.

Sara Rančigaj

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