Ljubljana, 01 March (STA) - Slovenia's economy grew 0.1% in the last quarter of 2009 but it shrank by 5.5% year-on-year. At the annual level the economy contracted by 7.8%, Slovenia's Statistics Office said Monday. This is the first annual drop in GDP since 1992 and the steepest decline in the eurozone, according to provisional Eurostat data.
The 0.1% increase over the previous quarter is the slowest pace of growth since the economic recovery began in the second quarter of the year. In the previous two quarters the economy expanded by 0.7% and 1%, respectively.
"This provides some more positive signals - or at least less pessimistic - but it leaves some doubt about a more robust recovery in the coming months," said Karmen Hren, the head of national accounts at the Statistics Office.
The recovery was held back by exports of goods and services, which were down 3.6% over the year before, a pace much slower than in the first three quarters. For the whole of 2009 exports declined 15.6%.
Imports fell even more, by 8.5% over the same quarter of 2008. At the annual level, imports were down 17.9%.
At the quarterly level the external balance had a net positive contribution to GDP growth of 3.6 percentage points.
Whereas trade shows signs of recovery, domestic investment continues to decline precipitously. Gross capital formation plunged 27.7% over the same quarter of 2008 and 30.2% for the whole 2009.
The rundown of inventories also continued apace, as inventories were down 3.9% for the whole year, contributing negatively to GDP growth.
Household spending dropped 0.9% in Q4, a figure similar to previous quarters, and it was down 1.4% for the whole of 2009. Similarly, government spending was down 1.4% in the 4th quarter, the first decline after 1992.
The Institute for Macroeconomic Analysis and Development (IMAD), a government think-tank, said the figures showed the recovery was still unstable as construction and manufacturing companies focused on the domestic market continue to struggle.
"Similar fluctuation in economic activity is expected this year," IMAD deputy director Maja Bednas said in a written statement. "We estimate that growth this year will be positive but modest."
Economist Bogomir Kovac of the Ljubljana Faculty of Economics said the figures showed Slovenia was still in a crunch.
Slovenia cannot make a breakthrough with exports, but at the same time domestic demand is insufficient to generate a critical mass that would kick-start the economy, Kovac told STA.
Igor Masten, also of the Ljubljana Faculty of Economics, meanwhile believes that the figures have showed stimulus measures were insufficient, and that nothing has been done to boost competitiveness.
"In terms of cost-effectiveness the Slovenian economy has not gained anything. We cannot expect that a weak recovery of international trade would provide a huge boost to domestic economic activity," Masten told STA.