Slovenia Economic Outlook
After slowing significantly in Q4 last year, the economy accelerated slightly in Q1. A rebound in exports and an acceleration in investment more than offset a stronger contraction in public spending and a deceleration in private consumption. Exports were likely boosted by easing supply-chain pressures and stronger-than-expected activity in key trade partners. Still-high inflation likely weighed on private consumption, despite a significant rise in wage growth and lower unemployment. Turning to Q2, our panelists expect growth to inch down. Firms became slightly more pessimistic and their hiring intentions moderated in April versus Q1. That said, inflation moderated slightly in the same month, and consumers became less pessimistic during April–May versus Q1.
Harmonized inflation decelerated to 9.2% in April (March: 10.4%) due to lower price pressures for food, housing and transport. That said, prices for recreation accelerated. Inflation will slow this year due to cooling demand and energy prices and a tougher base effect. Rising commodity prices are an upside risk.